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DOCUMENTS 
DEPT. 


UC-NRLF 


t  of 


BUREAU    OF    STATFS't   CS 

CHARLES     F.     GETTEMY,     O.ic^ 


A   SPECIAL  REPORT 


ON 


THE  CIST  OF  RETIREMENT  SYSTEMS  FOR 

STATE  AND  COUNTY  EMPLOYEES 

IN  MASSACHUSETTS 


JANUARY.  19  SI 


BOSTON 

WRIGHT    &    POTTFR     PRINTING    COMPANY 

STATE    PRINTERS 

1911 


GIFT  OF 


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JUMEN 

DEPT. 


HOUSE  No.  1400 


Cfte  Commontoealtf)  of 


REPORT  OF  AX  INVESTIGATION  BY  THE  DI- 
RECTOR OF  THE  BUREAU  OF  STATISTICS  AS 
TO  THE  COST  TO  THE  COMMONWEALTH  AND 
THE  COUNTIES  OF  THE  ESTABLISHMENT  OF 
RETIREMENT  SYSTEMS  FOR  EMPLOYEES. 


To  the  Honorable  Senate  and  House  of  Representatives  :  — 

I  have  the  honor  to  submit  herewith  a  report  of  the  inves- 
tigation made  pursuant  to  the  provisions  of  the  following 
Resolve  of  the  last  Legislature :  — 

[CHAPTER  160,  RESOLVES  OF  1910.] 

RESOLVE  TO  PROVIDE  FOR  AN  INVESTIGATION  RELATIVE  TO 
RETIREMENT  SYSTEMS  FOR  STATE  AND  COUNTY  EM- 
PLOYEES. 

Resolved,  That  the  director  of  the  bureau  of  statistics  is 
hereby  authorized  and  directed  to  make  an  investigation  as 
to  the  cost  to  the  counties  of  the  commonwealth  by  the  estab- 
lishment of  retirement  systems  for  employees  as  provided  for 
in  the  senate  bill  numbered  three  hundred  and  seventy-five 
of  the  present  year,  also  as  to  the  cost  to  the  commonwealth 
by  the  establishment  of  a  retirement  fund  for  its  employees 
as  provided  for  in  the  senate  bill  numbered  three  hundred 
and  seventy-six  of  the  present  year.  He  is  authorized  to 
employ  experts  in  determining  the  cost,  and  shall  report  his 
findings  to  the  next  general  court  not  later  than  the  first 
Wednesday  in  January.  Any  expenses  incurred  under  this 
resolve  shall  be  paid  from  the  appropriation  for  the  bureau 
of  statistics.  [Approved  June  15,  1910.} 


344191 


2  KKTIHKMENT  SYSTEM.  [Jan. 

»  «    i.« 

In  >urorchfloe  ,Vjth  the>  authority  of  the  resolve,  Prof.  F. 
Spencer  Baldwin,  \\lio  was^the  secretary  of  the  late  Commis- 
sion on  Old-Age  Pensions,  Annuities,  and  Insurance,  was 
engaged  as  an  expert  to  take  immediate  charge  of  the  inquiry; 
and  the  findings  of  this  report  are  the  result  of  his  computa- 
tions. 

The  bills  upon  which  the  investigation  was  primarily  based, 
namely,  Senate  Bills  Nos.  375  and  376,  provided  for  the  estab- 
lishment of  retirement  systems  for  county  employees  and  for 
state  employees,  respectively,  on  a  basis  of  substantially  equal 
division  of  expense  between  the  beneficiaries  and  the  public  treas- 
ury. By  the  terms  of  the  bills  the  employees  are  to  be  assessed 
regularly  on  their  wages  and  salaries  at  the  rate  of  not  less  than 
one,  nor  more  than  five,  per  cent,  to  provide  a  fund  out  of  which 
annuities  shall  be  paid  to  those  retired  from  the  service  (excep- 
tion being  made,  however,  in  the  case  of  employees  receiving 
more  than  $30  per  week,  who  are  not  to  be  assessed  on  the 
excess  above  that  amount  but  simply  on  the  flat  basis  of  $30 
per  week).  The  annuity  received  by  each  employee  retired 
under  the  provisions  of  the  act  is  such  amount  as  his  con- 
tributions during  his  period  of  service,  accumulated  with  inter- 
est at  three  per  cent  compounded  semi-annually,  will  provide 
for  him  according  to  actuarial  computation. 

The  employee  is  given  his  choice  of  two  kinds  of  annuity: 
First,  a  life  annuity  payable  monthly;  second,  a  life  annuity 
payable  monthly,  with  the  provision  that  in  the  event  of  the 
death  of  the  annuitant  before  receiving  payments  equal  to  the 
sum  of  his  deposits  accumulated,  with  regular  interest,  at  the 
date  of  his  retirement,  the  difference  shall  be  paid  to  his  legal 
representatives.  In  addition  to  the  annuity,  the  employee  is 
to  receive  in  each  case  a  pension  of  equivalent  amount  paid  from 
the  public  treasury.  In  no  case  is  the  total  allowance,  includ- 
ing annuity  and  pension,  to  be  less  than  $200  per  year. 

The  text  of  the  resolve  required  this  investigation  to  be 
based  upon  the  provisions  of  Senate  Bills  375  and  376,  but 
amendments  were  offered  to  these  bills  after  they  had  been 
reported  which  altered  their  provisions  by  relieving  the  Com- 
monwealth and  the  counties  of  the  necessity  of  maintaining 
pension  funds;  and  as  such  amendments,  if  adopted,  would 
materially  affect  the  burden  of  expense  to  be  borne  by  the 


1911.]  HOUSE  — No.  1400.  3 

public  treasury,  calculations  of  cost  have  been  made  in  this 
report  based  upon  the  provisions  both  of  the  original  and  the 
amended  bills.  Three  sets  of  calculations  have  been  made  for 
each  set  of  bills  showing :- 

(1)  Estimated  expense  during  the  first  year  of  operation  of 

retiring  all  employees  65  years  of  age  and  over  who 
would  during  the  first  year  receive  a  pension  only, 
based  on  prior  service,  no  annuity  fund  having  yet 
accumulated. 

(2)  Estimated  expense  for  the  sixth  year  of  operation  of  retir- 

ing all  employees  between  60  and  64  years  of  age  during 
the  first  five  years  of  operation,  allowances  being  made 
for  mortality. 

(3)  Estimated  expense  for  a  year  of  full  operation  of  retiring 

all  present  employees  65  years  of  age  and  over.  This 
calculation  differs  from  (1)  in  that  all  retired  employees 
would,  if  the  system  were  in  full  operation,  draw  annui- 
ties provided  by  their  contributions  during  their  service 
periods  and  also  pensions  of  equivalent  amount;  that 
is,  this  computation  is  based  on  the  assumption  that 
the  system  had  been  put  into  operation  at  the  time 
the  oldest  present  employee  entered  the  service,  and 
that  all  the  beneficiaries  had  been  contributing  to 
the  annuity  fund  from  the  date  of  their  first  employ- 
ment. While  the  basis  of  this  latter  method  of  esti- 
mating the  expense  of  applying  the  system  to  the 
present  staff  of  employees  is  purely  hypothetical,  it 
probably  gives  a  better  idea  of  the  cost  than  would  an 
estimate  of  the  expense  of  operation  at  some  future 
date  which  would  be  merely  a  problematical  forecast. 

As  hereafter  explained,  it  is  impossible  to  calculate  accurately 
in  advance  the  cost  of  such  plans  as  are  contemplated  by  the 
proposed  legislation,  since,  among  other  reasons,  it  cannot  be 
determined  how  many  employees  would  elect  to  participate 
in  a  voluntary  system,  nor  how  the  details  of  the  different 
propositions  involved  would  affect,  in  the  aggregate,  the  sev- 
eral classes  of  employees  who  had  elected  to  participate.  It 
is  obvious,  therefore,  that  the  calculations  of  cost  had  to  be 
based  on  certain  more  or  less  arbitrary  assumptions  which, 
together  with  an  explanation  of  the  method  followed  in  mak- 


4  RETIREMENT  SYSTEM.  [Jan. 

ing  the  calculations,  are  fully  set  forth  subsequently  in  the 
body  of  this  report.  It  should  also  be  understood  that  the 
word  "cost"  in  this  connection  is  used  in  the  sense  of  direct 
pecuniary  outlay  and  does  not  pretend  to  represent  the  net 
cost  of  the  operation  of  the  system.  With  these  considerations 
and  qualifications  in  mind,  the  following  summary  statement 
of  the  results  of  the  inquiry  may  be  made,  the  figures,  as  given, 
including  an  estimate  of  the  cost  of  administration  :  — 

I.   ESTIMATED  COST  TO  THE  COMMONWEALTH. 


1.  For  the  first  year  of  operation  :  -  SemfiSl  376  SenatefiS  441 

(a)  on  a  1  per  cent  basis,        .  .  $88,026.98  $48,067.54 

(6)  on  a  5  per  cent  basis,        .  .  261,076.19  61,279.00 

2.  For  the  sixth  year  of  operation  :  — 

(a)  on  a  1  per  cent  basis,        ..  .  110,503.32  66,879.79 

(6)  on  a  5  per  cent  basis,        .  .  298,062.31  79,944.64 

3.  For  a  year  of  full  operation  :  — 

(a)  on  a  1  per  cent  basis,        .  .  81,655.36  46,675.84 

(6)  on  a  5  per  cent  basis,        .  .  236,208.89  61,311.30 

II.   ESTIMATED  TOTAL  COST  TO  ALL  THE  COUNTIES. 

1.  For  the  first  year  of  operation  :  -          SenSemi  375         Sena^Biii  440 

(a)  on  a  1  per  cent  basis,        .        .    $40,078.49         $28,547.  12 
(6)  on  a  5  per  cent  basis,        .        .      88,853.39  43,196.55 

2.  For  the  sixth  year  of  operation  :  — 

(a)  on  a  1  per  cent  basis,        .        .     48,91  1  .  56  38,725  .  41 

(6)  on  a  5  per  cent  basis,        .        .      99,574.76  52,614.00 

3.  For  a  year  of  full  operation  :  — 

(a)  on  a  1  per  cent  basis,        .        .      31,061  .  51  24,812  .  40 

(b)  on  a  5  per  cent  basis,        .        .      60,573.54  41,328.00 

In  general,  the  figures  for  a  year  of  full  operation  based 
upon  the  assumption  explained  on  the  preceding  page  are  some- 
what lower  than  those  for  the  first  year  of  operation  under 
present  conditions.  This  is  due  to  the  fact  that  the  amounts 
required  for  minimum  payments  increase  the  cost  in  the  first 
year.  In-  the  case  of  the  assumed  year  of  full  operation,  the 
number  of  instances  of  minimum  payment  is  considerably 
smaller  than  would  be  found  under  the  actual  conditions  dur- 
ing the  first  year. 

The  cost  for  the  several  counties,  individually,  of  course 
varies  widely,  —  Nantucket  standing  at  one  extreme  and 
Suffolk  at  the  other.  In  the  case  of  four  counties  —  Barn- 


1911.]  HOUSE  — No.  1400.  5 

stable,  Franklin,  Nantucket,  and  Plymouth  —  there  are  no 
expenditures  under  the  amended  bill  for  the  first  year  or  for 
the  year  of  full  operation,  since  there  are  no  persons  in  the 
employ  of  these  counties  65  years  of  age  and  over,  eligible 
for  retirement.  In  the  case  of  two  of  these  counties  —  Barn- 
stable  and  Nantucket  —  there  are  no  expenditures  under  the 
amended  bill  for  the  sixth  year  of  operation.  The  maximum 
figure  for  Suffolk  County,  which  has  the  highest  amounts  in 
the  county  table,  is  only  130,822.14  for  the  sixth  year  of  opera- 
tion under  the  unamended  bill  on  a  five  per  cent  basis. 

NUMBER  OF  ELIGIBI.ES. 

The  first  step  necessary  to  the  inquiry  was  to  take  a  census 
of  the  employees  of  the  Commonwealth  and  of  each  of  the  14 
counties,  and  incidentally  to  determine  what  persons  should 
be  regarded  for  the  purpose  in  view  as  "employees,"  a  problem 
which  of  itself  presented  numerous  difficulties  involving  some 
arbitrary  decisions.  (See  page  13  for  statement  in  regard  to 
excluded  employees.)  Some  of  the  results  disclosed  by  the 
methods  adopted  were  as  follows :  — 

I. 

Number  of  eligible  state  employees,  age  70  or  over,  ...  39 

age  65  to  69,  ...  68 

age  60  to  64,  ...  131 

under  60,        .  .               .  6,283 


Total  number  of  state  employees  eligible, 6,521 

Aggregate  amount  of  salaries  assessable,  ....    $4,096,949 . 13 

II. 

Number  of  eligible  county  employees,  age  70  or  over,  ...  42 

"   "          "           age  65  to  69,      ...  39 

age  60  to  64,      ...  73 

under  60,    .        .        .        .  1,001 


((  1C  U 

l(  U  (I 


Total  number  of  county  employees  eligible, 1,155 

Aggregate  amount  of  salaries  assessable,  .       .        .        .       $933,374.75 

The  above  data,  for  the  State,  classified  by  departments, 
boards,  commissions,  etc.,  and  for  the  several  counties  sepa- 
rately are  given  in  the  tables  on  pages  19-23.  The  means 


6  RETIREMENT  SYSTEM.  [Jan. 

taken  to  procure  this  information,  which  was  a  necessary  pre- 
liminary to  making  the  calculations  of  cost,  may  be  briefly 
described.  It  had  first  to  be  ascertained  what  was  the  number 
of  persons  on  the  pay-rolls  who  would  be  eligible  for  pensions 
under  the  proposed  system,  their  ages,  wages  or  salaries,  and 
periods  of  service.  An  enumeration  of  the  pensionable  em- 
ployees of  the  Commonwealth  and  the  counties  was  accord- 
ingly made  by  the  Bureau  of  Statistics  for  the  purpose  of  gather- 
ing this  information.  Blanks  were  sent  out  to  the  various 
departments,  boards,  and  commissions  calling  for  returns  show- 
ing for  each  employee  (a)  the  age  at  last  birthday  prior  to 
July  1,  1910;  (b)  the  date  of  entry  into  the  service  of  the  Com- 
monwealth or  county;  (c)  the  salary  or  wages;  and  (d)  whether 
a  veteran  or  not.  The  list  of  employees  of  the  Commonwealth 
was  made  up  from  the  manual  for  the  General  Court,  the 
Auditor's  report,  and  other  sources  of  information.  In  mak- 
ing up  the  list  of  county  employees  for  the  purpose  of  this 
census,  the  manual  for  the  General  Court  and  reports  of  the 
County  Treasurers  were  used,  the  lists  thus  obtained  being 
completed  by  correspondence  with  the  County  Treasurers  and 
other  officials. 

The  cost  of  this  inquiry,  which  was  borne  by  the  Bureau 
out  of  its  regular  appropriations,  has  been  as  follows :  — 

For  expert,  field,  and  clerical  services,     .        .  .        .       $919.00 

For  travel, 59.80 

For  printing,  postage,  etc., 39.87 


Total, $1,018.67 

Tabulations  of  the  principal  data  resulting  from  the  inquiry, 
together  with  such  explanatory  text  as  has  seemed  desirable, 
are  given  in  the  following  pages,  while  the  text  of  the  bills 
on  which  the  investigation  was  based  is  reproduced  in  an  appen- 
dix for  convenience  of  reference  in  connection  with  the  report. 

Respectfully  submitted, 

CHARLES  F.  GETTEMY, 

Director,  Bureau  of  Statistics. 
STATE  HOUSE,  BOSTON,  January  4,   1911. 


1911.]  HOUSE  — No.  1400. 


RESULTS  OE  THE  INQUIRY  IN  DETAIL. 


1.     The  Proposed  Legislation. 

Drafts  of  bills  providing  for  the  establishment  of  retirement 
systems  of  employees  of  the  Commonwealth  and  of  the  counties 
were  submitted  to  the  last  Legislature  in  the  report  of  the 
Commission  on  Old-Age  Pensions,  Annuities,  and  Insurance 
(House  No.  1400,  January,  1910).  The  bills  were  referred  to 
the  Committee  on  Legal  Affairs  and  were  reported  favorably, 
with  slight  amendments.  They  were  then  referred  to  the  Sen- 
ate Committee  on  Ways  and  Means  which  reported  instead 
the  resolve  providing  for  this  investigation. 

The  bills,  as  drawn  by  the  Commission  and  reported  by  the 
Committee  on  Legal  Affairs,  provided  that  a  fund  to  pay  the 
pensions  should  be  accumulated  by  the  Commonwealth  or  the 
counties,  as  the  case  might  be.  They  were  required  to  con- 
tribute each  month  an  amount  sufficient  to  maintain  reserves 
equal  to  the  net  value  of  the  pensions  corresponding  to  the 
annuities  provided  by  the  contributions  of  the  employees. 
That  is,  the  Commonwealth  and  the  counties  were  to  make 
regular  contributions  to  a  pension  fund  equivalent  to  the  con- 
tributions of  the  employees  to  an  annuity  fund. 

Later,  an  amendment  was  drawn  by  the  advice  of  the  State 
Insurance  Commissioner,  designed  to  simplify  the  bookkeep- 
ing of  the  retirement  system.  This  amendment  relieved  the 
Commonwealth  and  the  counties  of  the  necessity  of  making 
current  contributions  for  the  purpose  of  maintaining  a  pension 
fund.  The  amended  provision  merely  requires  the  Common- 
wealth and  the  counties  to  pay  the  pensions  when  the  latter 
become  due.  This  amendment  was  incorporated  by  Senator 
Harvey,  Chairman  of  the  Committee  on  Legal  Affairs,  into 
the  drafts  of  new  'bills,  Senate  No.  440  and  Senate  No.  441, 
which  he  offered  as  a  substitute  for  the  resolve  ordering  this  in- 


8  RETIREMENT  SYSTEM.  [Jan. 

vestigation  as  reported  by  the  Senate  Committee  on  Ways  and 
Means;  the  substitute  was,  however,  rejected  and  the  resolve 
adopted.  A  similar  amendment  was  introduced  in  the  bill 
authorizing  cities  and  towns  to  establish  retirement  systems 
as  enacted  by  the  General  Court  last  year.  As  this  amendment 
might  be  adopted  by  the  Legislature  if  bills  providing  for  state 
and  county  retirement  systems  should  eventually  be  passed, 
calculations  have  been  made  in  this  report  to  show  the  cost 
of  the  proposed  systems  under  the  amended  plan,  as  well  as 
under  the  original  bills. 

The  age  of  voluntary  retirement  is  fixed  at  sixty  years;  that 
is,  employees  who  have  reached  that  age  may  retire  or  may 
be  retired  by  the  board  entrusted  with  the  administration  of 
the  act.  The  age  of  compulsory  retirement  is  fixed  at  seventy 
years;  that  is,  employees  who  have  reached  that  age  must 
retire  or  be  retired.  An  additional  requirement  of  fifteen  years' 
continuous  service  is  laid  down  for  employees  retiring  or  retired 
at  the  age  of  sixty.  Furthermore,  employees  who  have  served 
thirty-five  years  continuously  may  retire  or  be  retired  at  any 
age. 

Participation  in  the  retirement  system  is  optional  for  present 
employees.  It  is  obligatory  for  future  employees,  those  enter- 
ing the  service  after  the  establishment  of  the  retirement  sys- 
tem, with  these  exceptions:  (a)  officers  elected  by  popular 
vote;  and  (b)  employees  eligible  for  a  pension  from  the  Com- 
monwealth or  the  county,  as  the  case  may  be,  for  any  reason 
other  than  membership  in  the  association.  Both  of  these  are 
debarred  from  participation. 

In  addition  to  pensions  for  subsequent  service,  pensions  for 
prior  service  are  provided;  that  is,  employees  in  the  service 
of  the  State  or  county  when  the  retirement  plan  is  estab- 
lished are  to  receive,  in  addition  to  the  pension  which  they  may 
secure  through  their  contributions  to  the  annuity  fund,  an 
extra  allowance  equal  to  the  amount  of  the  annuity  that  they 
might  have  earned  for  themselves  had  the  scheme  been  in 
operation  when  they  entered  the  service  and  had  they  made 
contributions  to  the  fund  from  that  time  in  proportion  to  their 
current  wages  or  salaries.  It  should  be  noted,  further,  that 
employees  who  had  reached  the  age  of  sixty  years  when  the 


1911.]  HOUSE  — No.  1400.  9 

retirement  system  was  established,  and  employees  who  had 
reached  the  age  of  fifty-five  years  at  that  date  and  also  became 
members  of  the  association,  may  be  retired  with  pensions  for 
prior  service  without  having  completed  the  otherwise  required 
service  period  of  fifteen  years. 

Provision  is  made  for  refunding  the  contributions  of  employees 
who  withdraw  from  the  service  without  becoming  entitled  to  a 
pension.  In  case  a  member  of  the  association  leaves  employ- 
ment for  any  cause  other  than  death  before  becoming  entitled 
to  a  pension,  there  shall  be  refunded  to  him  all  the  money 
that  has  been  paid  in  by  him,  with  regular  interest.  In  case 
a  member  of  the  association  dies  before  becoming  entitled  to 
a  pension,  there  shall  be  paid  to  his  legal  representatives  all 
the  money  that  has  been  paid  in  by  him,  with  such  interest 
as  shall  have  been  earned  on  the  deposits. 

The  administration  of  the  system  is  entrusted  to  a  Board  of 
Retirement,  consisting  of  the  State  or  County  Treasurer,  ex- 
officio,  another  member  chosen  by  the  Retirement  Association 
composed  of  the  participating  employees,  and  a  third  member 
selected  by  the  first  two,  or  appointed  by  the  Governor  or  the 
Chairman  of  the  Board  of  County  Commissioners  in  case  of 
their  failure  to  agree.  The  Insurance  Department  of  the  Com- 
monwealth is  given  certain  powers  of  supervision  with  refer- 
ence to  the  actuarial  and  administrative  features  of  the  system. 

The  retirement  system  for  state  employees  is  to  be  established 
on  the  first  day  of  January  or  on  the  first  day  of  July  follow- 
ing the  expiration  of  three  months  after  the  date  on  which 
the  act  takes  effect.  A  retirement  system  for  counties  is  not 
to  be  established  until  the  act  has  been  accepted  by  the  County 
Commissioners  and  by  the  voters  of  the  county.  The  refer- 
endum clause  in  the  bill  for  counties  provides  that  upon  the 
initiative  of  the  County  Commissioners  the  question  of  accept- 
ance shall  be  submitted  to  the  voters,  and,  if  a  majority  of 
the  voters  voting  on  the  question  at  such  election  shall  vote 
in  the  affirmative,  the  act  shall  take  effect. 

2.     The  Basis  of  Calculation. 

It  is  obvious  that  the  cost  of  such  a  plan  cannot  be  calculated 
accurately  in  advance.  Any  estimate  can  be  only  approximate . 


10  RETIREMENT  SYSTEM.  [Jan. 

There  are  several  elements  of  uncertainty  that  necessarily  enter 
into  the  calculation.     For  example  :- 

1.  It  is  impossible  to  tell  exactly  how  many  of  the  pres- 
ent employees  would  elect  to  participate  in  the  plan,  as  par- 
ticipation is  voluntary. 

2.  The  percentage  of  assessment  on  wages  and  salaries  is 
not  fixed  definitely,  but  may  range  from  one  to  five  per  cent, 
according  to  the  decision  of  the  Board  of  Retirement;    also 
employees   may   be   classified   with   different  percentages   of 
contribution  for  the  various  classes. 

3.  The  number  of  employees  in  the  age  group  60  to  70 
years,  that  is,  between  the  age  of  voluntary  and  that  of  com- 
pulsory retirement,  who  would  retire  or  would  be  retired,  can- 
not be  determined. 

4.  The  number  of  employees  having  35  years  of  service  to 
their  credit  who  would  take  advantage  of  the  privilege  of 
retiring  or  who  would  be  retired  "for  the  good  of  the  service" 
cannot  be  known  in  advance. 

5.  Retiring  employees  may  choose  between  two  kinds  of 
annuity:    A  regular  life  annuity  and  a  special  form  of  life 
annuity,  under  which,  in  the  event  of  the  death  of  the  annui- 
tant before  receiving  an  amount  equal  to  the  sum  of  his 
accumulated  contributions,  the  difference  shall  be  paid  to  his 
legal  representatives.     The  amount  of  the  second  form   of 
annuity  is  somewhat  smaller  than  that  of  the  first.     It  is 
not  possible  to  tell  how  many  annuitants  would  elect  the 
second  form.     The  proportion  of  such  annuitants  in  the  total 
number  would  make  a  difference  in  the  cost  under  the  amended 
plan  in  which  the  Commonwealth  or  the  county  simply  pays 
the  pensions  when  due,  as  the  amounts  of  the  pension  would 
be  smaller  in  the  case  of  this  class  of  annuitants.     It  would 
make  no  difference  under  the  unamended  bills,  which  require 
the  Commonwealth  or  the  county  to  pay  regular  contribu- 
tions equivalent  to  the  contributions  of  the  employees. 

Under  the  conditions,  any  calculation  of  cost  must  be  based 
on  certain  more  or  less  arbitrary  assumptions.  For  the  pur- 
pose of  making  a  preliminary  calculation,  the  following  assump- 
tions may  be  taken  :- 

(1)  It  may  be  assumed  that  all  present  employees  will  par- 
ticipate in  the  plan.     While  participation  for  this  class  is  vol- 


1911.]  HOUSE  — No.  1400.  11 

untary,  the  advantages  held  out  are  so  considerable  that  it 
seems  reasonable  to  assume  that  all  persons  now  in  the  ser- 
vice would  become  members  of  the  Retirement  Association. 

(2)  The  calculations  may  be  based  on  the  assumption  that 
either  the  minimum  rate  of  one  per  cent  or  the  maximum 
rate  of  five  per  cent  assessment  on  wages  and  salaries  would 
be  chosen.     It  has  seemed  unnecessary,  for  the  purpose  of 
preliminary  estimate,  to  calculate  the  cost  for  the  intermediate 
rates  of  two,  three,  and  four  per  cent. 

(3)  It  may  be  assumed  that  all  employees  of  the  age  of 
65  or  over  would  retire  or  would  be  retired  when  the  system 
went  into  operation.     This  assumption  is  not  altogether  arbi- 
trary, but  seems  a  reasonable  forecast  of  the  probable  scope 
of  the  retirement  system  during  the  first  year  of  operation. 

(4)  The  number  of  employees  who  would  be  eligible  for 
retirement  under  the  thirty-five  years  of  service  clause  is  so 
extremely  small  as  to  be  a  negligible  factor. 

(5)  The  percentage  of  annuitants  who  would  choose  the 
second  form  of  annuity,  yielding  the  smaller  amount,  would 
undoubtedly  be  small  and  may  be  left  out  of  account.     This 
factor,  moreover,  does  not  enter  at  all  into  the  calculations 
under  the  unamended  bills. 

On  the  basis  of  these  assumptions,  three  calculations  have 
been  made:  (1)  Cost  for  the  first  year  of  operation;  (2)  cost 
after  five  years  of  operation,  —  that  is,  for  the  sixth  year; 
(3)  cost  for  an  assumed  year  of  full  operation.  The  last  calcu- 
lation shows  what  the  system  would  cost  if  in  full  effect  with 
the  present  staff  of  employees;  it  is  based  on  the  assumption 
that  the  system  had  been  in  existence  from  the  time  the 
oldest  employee  entered  the  service,  and  that  all  eligible  em- 
ployees had  been  contributing  to  the  annuity  fund  from  the 
date  of  their  first  employment.  This  method  of  estimating 
the  expense  by  applying  the  system  to  the  present  staff  of 
employees  gives  a  better  idea  of  its  ultimate  cost  annually 
when  in  full  operation,  than  would  a  problematical  forecast  of 
the  expense  of  operation  at  some  future  date,  say  after  twenty 
or  thirty  years. 

The  contributions  to  be  made  by  the  Commonwealth  are 
defined  in  Senate  Bill  No.  376  as  follows :'- 

1  The  provisions  as  to  contributions  by  the  counties  in  Senate  Bills  No.  375  and  440  are 
the  same  as  those  for  the  Commonwealth. 


12  RETIREMENT  SYSTEM.  [Jan. 

"B.  Contributions  of  the  Commonwealth,  (a)  Each  month 
the  commonwealth  shall  contribute  such  amount  as  may  be 
necessary  to  maintain  the  contribution  and  pension  reserves 
as  of  the  last  day  of  the  preceding  month,  on  the  pensions  to 
be  paid 

"  (b)  Each  year,  in  January,  the  commonwealth  shall  con- 
tribute an  amount  equal  to  the  excess  of  the  surplus  arising 
from  annuity  deposits  over  the  surplus  arising  from  pension 
contributions If  for  any  year  the  surplus  aris- 
ing from  pension  contributions  shall  be  found  to  be  in  excess 
of  the  surplus  arising  from  annuity  deposits,  such  excess  shall 
forthwith  be  paid  over  to  the  commonwealth 

"  (c)  Each  month  the  commonwealth  shall  contribute  such 
amount  as  the  board  of  retirement  may  determine  to  be  neces- 
sary to  pay  current  pensions  for  prior  service 

"  (d)  Each  month  the  commonwealth  shall  contribute  such 
amount  as  the  board  of  retirement  may  determine  to  be  neces- 
sary to  ensure  the  minimum  payments  provided  for  .  .  ." 

In  the  amended  bill,  Senate  Bill  No.  441,  the  provisions  as 
to  contributions  by  the  Commonwealth  are  as  follows:  — 

"  B.  Contributions  of  the  Commonwealth,  (a)  Each  month 
the  commonwealth  shall  contribute  such  amount  as  the  board 
of  retirement  may  determine  to  be  necessary  to  pay  current 
pensions 

"  (b)  Each  year,  in  January,  the  commonwealth  shall  con- 
tribute an  amount  equal  to  the  surplus  arising  from  annuity 
deposits;  in  case  there  should  be  a  deficiency  arising  from 
such  annuity  deposits,  instead  of  a  surplus,  then  the  common- 
wealth shall  make  good  such  deficiency. 

"  (c)  Each  month  the  commonwealth  shall  contribute  such 
amount  as  the  board  of  retirement  may  determine  to  be  neces- 
sary to  pay  current  pensions  for  prior  service 

"  (d)  Each  month  the  commonwealth  shall  contribute  such 
amount  as  the  board  of  retirement  may  determine  to  be  neces- 
sary to  ensure  the  minimum  payments  provided  for  .  .  ." 

There  is  no  way  of  estimating  the  amount  that  the  Common- 
wealth or  the  county  might  be  called  upon  to  contribute  under 
the  original  bills  in  order  to  equalize  the  surplus  arising  from 
annuity  deposits  and  the  surplus  arising  from  pension  contribu- 

1  The  provisions  as  to  contributions  by  the  counties  in  Senate  Bills  No.  375  and  440  are 
the  same  as  those  for  the  Commonwealth. 


1911.]  HOUSE  — No.  1400.  13 

tions  or  the  amount  that  might  be  paid  over  to  the  Common- 
wealth or  the  county  on  this  account.  Similarly,  the  amount 
that  the  Commonwealth  or  the  county  might  be  called  upon 
to  contribute  under  the  amended  plan,  in  order  to  make  up 
a  surplus  or  a  deficit  arising  from  annuity  deposits,  cannot  be 
determined  in  advance.  There  would  be  no  payments  what- 
ever on  these  accounts  for  the  first  year,  as  there  would  be 
no  previous  annuity  deposits  to  give  rise  either  to  a  surplus  or 
to  a  deficit.  For  the  sixth  year,  moreover,  the  amounts  would 
be  small  in  any  event.  This  element  in  the  cost  may  accord- 
ingly be  left  out  of  account  as  practically  negligible  for  the 
present  calculations. 

3.     Excluded  Employees. 

Employees  not  eligible  for  pensions  in  the  bills  were  excluded 
from  the  tabulation.  The  bills  expressly  exclude  two  classes: 
First,  officers  elected  by  popular  vote;  second,  employees 
entitled -to  a  pension  from  the  Commonwealth  or  the  county, 
respectively,  for  any  reason  other  than  membership  in  the 
Retirement  Association. 

The  persons  excluded  under  these  provisions  are,  in  the 
case  of  the  State :  — 

1 .  Elected   officials,  —  including   the   Governor,   the  Lieu- 
tenant-Governor,  members  of    the   Council,  members  of  the 
General  Court,  the  Treasurer,  the  Auditor,  the  Secretary  of 
State,  the  Attorney-General,  and  the  District  Attorneys. 

2.  Employees    pensionable    under    existing    legislation,  — 
including  judges  of  the  Supreme,  the  Superior,  and  the  Land 
Courts;    judges  and  registrars  of  probate;    veterans  of  the 
Civil  War;    members  of  the  Metropolitan  Park  Police  force; 
all  employees  of  the  State  Farm,  Bridge  water;   certain  officers 
of  the  State  Prison  at  Charlestown,   of  the  Massachusetts 
Reformatory    at    Concord,    of    the    Reformatory    Prison    for 
Women  at  Sherborn,  and  of  the  Prison  Camp  and  Hospital 
at  Rutland.1 

1  The  Prison  Officers'  Retirement  Act,  Chap.  601,  Acts  1908,  is  construed  by  the  Prison 
Commissioners  to  include  all  employees  and  officers  of  the  State  Farm  and  certain  officers  of 
the  other  state  correctional  institutions.  There  is  no  provision  in  the  Act  defining  the  term 
''officer."  There  are,  however,  other  statutory  provisions  making  such  definition  in  the  case 
of  all  the  state  correctional  institutions  except  the  State  Farm.  Officers  so  prescribed  and 
held  to  be  eligible  to  retirement  under  the  Prison  Officers'  Retirement  Act  have  been  ex- 
cluded in  the  enumeration,  as  not  eligible  under  the  proposed  general  retirement  system. 
All  officers  and  employees  of  the  State  Farm  have  been  excluded  in  accordance  with  the 
ruling  of  the  Prison  Commissioners  holding  them  to  be  eligible  for  retirement  under  that  act. 


14  RETIREMENT  SYSTEM.  [Jan. 

The  persons  excluded  in  the  case  of  the  counties  are :  — 

1.  All    elected    officials,  —  including    the    county    commis- 
sioners and  associate  commissioners,  county  treasurers,  clerks 
of  court,  registrars  of  deeds,  and  sheriffs. 

2.  All  employees  pensionable  under  existing  legislation,  — 
including  veterans  of  the  Civil  War  and  all  officers  and  employ- 
ees of  county  jails  and  houses  of  correction.1 

3.  Strictly   temporary   or   casual   employees,    when   desig- 
nated as  such  in  the  returns. 

4.  Certain  county  officials  not  expressly  excluded  from  par- 
ticipation in  the  proposed  retirement  system,  but  presumably 
ineligible  under  a  logical  interpretation  of  the  bills,  have  also 
been  excluded.     Deputy  sheriffs  were  excluded  for  these  rea- 
sons:  They  are  appointed  by  an  elected  official  and  thus  are 
indirectly  dependent    on   election  for  their  tenure  of  office; 
furthermore,  they  do  not  give  full  time  or  render  continuous 
service;   finally,  their  remuneration  is  variable  and  uncertain, 
dependent  on  the  amount  of  service  that  they  render,  as  paid 
by  fees.     Special  justices,  masters  in  chancery,  and  assistant 
medical  examiners  were  also  excluded,  as  their  services  are 
occasional   and   their   remuneration   is   uncertain,    depending 
upon  the  amount  of  service  they  render,  as  paid  by  fee.     Trial 
justices    and    medical    examiners,    however,    were    included, 
although  their  cases  are  doubtful.     They  serve  only  part  time 
and  receive  small  pay,  except  in  a  few  cases. 

The  decision  of  questions  as  to  exclusion  or  inclusion  of 
certain  employees  gave  rise  to  considerable  difficulty.  Under 
the  bills,  all  present  employees  are  eligible  for  participation  in 
the  retirement  system  except  elected  and  pensionable  employees, 
as  already  mentioned.  This  provision  is  very  broad.  It  would 
seem  to  include  short-time  and  part-time  employees,  for  ex- 
ample: Medical  examiners  and  members  of  boards  who  receive 
small  amounts  for  occasional  service  in  the  form  of  fees.  It 
is  a  question  whether  employees  of  this  class,  who  draw  their 
remuneration  chiefly  from  other  sources  than  public  employ- 
ment, ought  to  be  admitted  to  participation  in  a  retirement 
system  for  state  and  county  employees.  The  bills  also  pre- 
scribe a  requirement  of  fifteen  years'  "continuous  service"  as 

1  The  Prison  Commissioners  construe  the  Prison  Officers'  Retirement  Act,  Chap.  601, 
Acts  of  1908,  to  include  all  officers  and  employees  of  county  jails  and  houses  of  correction. 


1911.]  •    HOUSE  — No.  1400.  15 

a  condition  of  qualifying  for  retirement  at  sixty  years  of  age. 
This  is  defined  in  Senate  No.  376  as  follows:  - 

"  (e)  The  words  'continuous  service'  mean  uninterrupted 
employment,  with  this  exception:  a  lay-off  on  account  of 
illness  or  reduction  of  force;  and  a  leave  of  absence,  suspen- 
sion or  dismissal  followed  by  reinstatement  within  one  year, 
shall  not  be  considered  as  breaking  the  continuity  of  service.'' 

It  seems  doubtful  whether  the  service  rendered  by  the  classes 
of  employees  in  question  would  come  under  this  definition. 
The  bills  contain  no  other  definition  of  what  shall  constitute 
employment  for  purposes  of  the  retirement  system.  In  the 
absence  of  such  definition,  it  seemed  advisable  to  construe 
the  terms  of  the  bills  broadly  and  to  include  many  persons 
who  probably  would  be  debarred  under  any  plan  actually 
put  into  operation.  Therefore,  only  employees  designated  as 
casual  or  temporary  have  been  excluded  in  the  present  enu- 
meration, in  addition  to  the  classes  expressly  declared  ineligible 
in  the  bills. 

4.    The  Method  of  Calculation. 

The  calculation  of  the  cost  for  the  first  year  of  operation 
shows  the  expense  of  retiring  all  eligible  employees  sixty-five 
years  of  age  and  over,  according  to  the  assumptions  previously 
indicated.  The  calculation  for  the  sixth  year  shows  also  the 
expense  of  retiring  the  group  60  to  64  years,  inclusive,  who, 
under  the  assumption,  would  be  pensioned  during  the  first 
five  years  of  operation.  In  this  calculation  allowance  is  made 
for  reduction  of  the  pension  roll  by  mortality.  The  mortality 
at  age  65,  according  to  the  American  tables,  is  roundly  40 
per  1,000,  or  4  per  cent  per  annum.  Deduction  has  accord- 
ingly, been  made  for  mortality  during  the  first  five  years  at 
the  rate  of  five  times  4  per  cent,  or  20  per  cent.  The  calcula- 
tion for  a  year  of  full  operation  shows  the  expense  of  providing 
for  all  present  employees  65  years  of  age  and  over  assuming 
the  scheme  to  have  been  in  operation  at  the  time  the  oldest 
present  employee  entered  the  service.  The  expense  here  differs 
from  that  for  the  first  year  of  operation  in  this  respect:  All 
retired  employees  would,  if  the  scheme  had  been  continuously 
in  operation  from  the  time  they  entered  the  service,  draw  an- 


16  RETIREMENT  SYSTEM.  [Jan. 

nuities  provided  by  their  contributions  during  their  entire 
service  period  and  also  pensions  of  equivalent  amount.  On 
the  other  hand,  if  the  scheme  were  now  in  its  first  year  of 
operation,  the  employees  immediately  retired  would  draw  only 
the  pensions  for  prior  service,  no  annuity  fund  having  accumu- 
lated. Therefore,  the  minimum  payments  by  the  Common- 
wealth or  the  county  required  to  make  up  in  each  case  the 
difference  between  the  total  amount  of  pension  and  annuity 
and  the  minimum  sum  of  $200  would  be  less  if  the  plan  had 
been  in  full  operation  since  they  entered  the  service  than  if  it 
were  in  the  first  year  of  operation,  because  the  annuity  and  the 
pension  would  be  counted  toward  the  minimum  in  the  former 
case,  while  only  the  pension  for  prior  service  would  be  so  reck- 
oned in  the  latter  case. 

The  procedure  in  calculating  the  amounts  of  pension  and 
annuity  was  briefly  as  follows:  The  amount  of  the  annual  sal- 
ary or  wages  of  each  retiring  employee  was  taken  and  the 
annual  contributions  were  reckoned  at  1  per  cent  and  5  per 
cent  of  this  amount  respectively.  The  amount  of  present  sal- 
ary or  wages  was  taken  for  this  purpose.  Presumably  the 
amount  earned  in  earlier  years  was  in  most  cases  smaller. 
Thus,  a  calculation  based  on  present  earnings  must  be  some- 
what excessive,  but  to  get  the  previous  earnings  of  all  employees 
of  the  Commonwealth  and  the  counties  and  make  calculations 
accordingly  was  impracticable.  The  amount  that  the  annual 
contribution  would  provide  accumulated  with  interest  com- 
pounded semi-annually  at  3  per  cent  was  then  calculated. 
The  annuity  which  this  sum  would  purchase  according  to  the 
American  mortality  tables  at  3  per  cent  was  next  reckoned. 
This  amount  was  taken  as  representing  the  amount  of  pension 
payable  by  the  Commonwealth  or  the  county.  The  additional 
payments  in  order  to  insure  in  each  case  the  minimum  of 
$200  were  also  calculated. 

5.     Estimates  of  Cost. 

The  estimates  that  have  been  made  show  only  the  probable 
gross  expense  of  the  retirement  system,  as  it  may  be  termed; 
that  is,  the  direct  pecuniary  outlay  that  would  be  entailed 
by  the  establishment  of  the  system.  In  order  to  determine  the 
net  expense  of  the  system,  it  would  be  necessary  to  take  account 


1911.]  HOUSE  — No.  1400.  17 

of  savings  that  might  be  effected  through  the  retirement  of 
inefficient  veterans.  Such  saving  might  be  effected  in  three 
ways:  First,  through  elimination  of  the  direct  waste  of  money 
paid  to  aged  employees  who  had  outlived  their  usefulness; 
second,  through  stoppage  of  the  indirect  loss  entailed  by  the 
slow  pace  forced  upon  the  rest  of  the  workers  by  the  presence 
of  inefficient  veterans;  third,  through  the  possible  gain  that 
might  result  from  the  substitution  of  younger  men  for  the  super- 
annuated employees  and  the  increased  efficiency  that  might 
be  promoted  by  the  retirement  system.  Manifestly,  the  effect 
of  the  system  in  these  various  directions  cannot  be  measured 
in  advance.  To  what  extent  the  economies  indicated  would 
actually  be  realized  in  practice  must  remain  a  matter  of  specu- 
lation until  the  experiment  has  been  made.  It  is  impossible, 
therefore,  to  present  an  estimate  of  the  net  cost  of  the  pro- 
posed retirement  system. 

The  expense  of  operation  for  the  State  is  estimated  as  follows:  — 

One  actuary, $3,000 

Clerks  and  stenographers, 15,000 

Office  rent  and  furnishings, 3,000 

Printing,  stationery,  etc., 3,000 

Contingent, 2,000 


Total, $26,000 

The  expense  of  operation  for  the  counties  would,  in  most  cases, 
be  very  low,  as  the  number  of  employees  eligible  for  participa- 
tion is  extremely  small.  The  expense  has  been  fixed  at  $500 
for  Barnstable,  Dukes,  and  Nantucket,  each  having  less  than 
10  participating  employees;  at  $1,000  for  Berkshire,  Bristol, 
Franklin,  Hampden,  Hampshire,  Norfolk,  and  Plymouth,  each 
with  less  than  100  participating  employees;  at  $1,500  for 
Essex,  Middlesex,  and  Worcester,  each  with  100  to  200  par- 
ticipating employees;  and  at  $2,000  for  Suffolk,  with  369 
participating  employees.  It  has  been  assumed  that  the  ex- 
pense of  administration  for  the  State  would  increase  ten  per 
cent  during  the  first  five  years.  No  allowance  has  been  made 
for  increase  in  the  case  of  the  counties,  as  the  amounts  set 
down  for  the  first  year  would  presumably  cover  any  additional 
expense  reasonably  to  be  expected  during  the  next  five-year 
period. 


18  RETIREMENT  SYSTEM.  [Jan. 

6.    Amounts  of  Pensions. 

The  following  examples  are  given  to  indicate  the  amounts 
of  retirement  allowances  that  would  be  received  by  pensioners 
under  the  proposed  system:  — 

1.  A  person  entering  employment  at  age  25,  serving  35 
years,  at  an  average  salary  of  $600,  and  retiring  at  age  60, 
would  be  entitled,  on  the  basis  of  a  one  per  cent  rate  of  con- 
tribution, to  an  annuity  of  $32.38.     As  this  amount  doubled 
by  the  pension  would  be  less  than  the  minimum,  $200,  fixed 
in  the  act,  such  a  person  would  receive  that  minimum.     On 
the  basis  of  a  five  per  cent  rate,  he  would  be  entitled  to  an 
annuity  of  $161.90,  which,  doubled  by  the  pension,  would 
make  a  total  annual  allowance  of  $323.80. 

2.  For  a  salary  of  $900,  under  similar  conditions  as  regards 
age  and  service,  the  allowances  would  be  as  follows :  — 

1%  Basis  5%  Basis 

Annuity, $48.57        $242.85 

Pension, 48.57          242.85 

Total, $97.14        $485.70 

3.  For  a  salary  of  $1,200:  — 


1%  Basis  5% 

Annuity, $64.76        $323.80 

Pension, 64.76          323.80 


Total, $129.52  $647.60 

4.  For  a  salary  of  $1,500:- 

1%  Basis  5%  Basis 

Annuity, $80.95  $404.75 

Pension, 80.95  404.75 


Total,       . $161.90        $809.50 

It  should  be  noticed  that  the  minimum  contribution  rate 
of  one  per  cent  would  not  in  any  case  yield  a  sufficient  amount 
of  annuity  and  pension  to  cover  the  minimum  payment. 


1911.] 


HOUSE  — No.  1400. 


19 


7.    Statistical  Presentations. 

The  results  of  this  enumeration,  so  far  as  they  are  pertinent 
to  the  present  inquiry,  are  presented  in  the  tables  that  follow. 

The  total  number  of  employees  of  the  Commonwealth  eligible 
for  participation  in  the  proposed  retirement  system  is  shown  in 
Table  I  to  be  6,521.  The  number  70  years  of  age  and  over  is 
39,  and  the  number  65  to  69  years  of  age  is  68.  Thus  the  total 
number  who  would  be  retired  the  first  year  under  the  assump- 
tion that  has  been  made  would  be  107.  The  additional  num- 
ber 60  to  64  years  of  age  who  would  be  retired  during  the  first 
five  years  of  operation  according  to  the  previous  assumption  is 
131.  The  number  under  60  years  of  age  is  6,283. 

TABLE  I.    State  Employees  Eligible  for  Participation  in  Proposed 
Retirement  System. 


DEPARTMENTS. 

Total 
Num- 
ber 

Amount  of 
Salaries 
Assessable 
under 
Retirement 
System  l 

Num- 
ber 70 
Years 
and 
Over 

Num- 
ber 
65-69 

Years 

Num- 
ber 
60-64 

Years 

Num- 
ber 
under 
60 
Years 

Adjutant-General's  Department,  . 

11 

$14,100.00 

1 

1 

- 

9 

Armory  Commission,     . 

2 

2,100.00 

- 

- 

- 

2 

Assistant  District  Attorneys  and 

Office  Force. 

15 

20,436.00 

_ 

_ 

_ 

15 

Attorney-General's  Department,  . 

11 

13,040.00 

- 

- 

- 

11 

Ballot  Law  Commission, 

3 

1,500.00 

- 

- 

- 

3 

Bank      Commissioner's     Depart- 

15 

18,664.00 

_ 

_ 

_ 

15 

ment. 

Board  of  Bar  Examiners, 

4 

3,400.00 

- 

- 

- 

4 

Board  of  Boiler  Rules,  . 

4 

1,000.00 

- 

1 

- 

3 

Board  of  Registration  in  Dentistry, 

5 

1,700.00 

- 

- 

- 

5 

Board    of    Registration    in    Em- 

3 

300.00 

_ 

_ 

_ 

3 

balming. 

Board  of  Registration  in  Medicine, 

8 

4,140.00 

1 

1 

2 

4 

Board   of   Registration    in   Phar- 

6 

4,100.00 

_ 

_ 

_ 

6 

macy. 
Board  of    Registration   in  Veter- 
inary Medicine. 

1 

400.00 

- 

- 

- 

1 

Boston  State  Hospital:  — 

Men's  Department, 

83 

36,751.40 

- 

- 

1 

82 

Women's  Department,    . 

134 

56,441.30 

- 

- 

2 

132 

Bridge  water  State  Hospital, 

71 

33,250.00 

- 

- 

2 

69 

Bureau  of  Statistics, 

57 

53,508.00 

- 

- 

1 

56 

1  The  figure  given  in  this  column  is  the  total  sum  paid  in  wages  and  salaries  to  employees 
eligible  for  participation  in  the  proposed  retirement  system  minus  all  amounts  in  excess 
of  $30  a  week,  which,  under  the  terms  of  the  bills,  are  not  assessable  for  contributions  to  the 
retirement  fund. 


20 


RETIREMENT  SYSTEM. 


[Jan. 


TABLE  I.     State  Employees  Eligible  for  Participation  in  Proposed 
Retirement  System  —  Continued. 


DEPARTMENTS. 

Total 

Num- 
ber 

Amount  of 
Salaries 
Assessable 
under 
Retirement 
System  *• 

Num- 
ber 70 
Years 
and 
Over 

Num- 
ber 
65-69 

Years 

Num- 
ber 
60-64 

Years 

Num- 
ber 
under 
60 
Years 

Bureau  of  War  Records, 

10 

$8,880.00 

- 

4 

1 

5 

Cattle  Bureau  of  the  State  Board 

6 

7,000.00 

_ 

_ 

j 

5 

of  Agriculture. 

Civil  Service  Commission,    . 

20 

18,900.00 

- 

- 

- 

20 

Clerk  of  the  House  of  Representa- 

5 

5,475.00 

_ 

_ 

_ 

5 

tives. 

Clerk  of  the  Senate,      . 

3 

4,120.00 

- 

- 

- 

3 

Commission  on  Probation,    . 

2 

2,460.00 

- 

- 

- 

2 

Commission  of  Public  Records,    . 

1 

1,560.00 

- 

- 

- 

1 

Commissioners  on  Fisheries  and 

46 

39,760.00 

1 

1 

1 

43 

Game. 

Controller  of  County  Accounts,    . 

4 

5,820.00 

- 

1 

- 

3 

Danvers  State  Hospital, 

275 

118,638.80 

1 

- 

6 

268 

Department  of  Weights  and  Meas- 

8 

9,240.00 

_ 

_ 

1 

7 

ures. 

District  Police  

66 

88,740.00 

- 

- 

3 

63 

Executive  Department, 

5 

6,520.00 

- 

- 

- 

5 

Firemen's  Fund  

- 

- 

- 

- 

- 

- 

Foxborough  State  Hospital, 

87 

35,850.00 

- 

1 

2 

84 

Free  Public  Library  Commission, 

1 

1,560.00 

- 

- 

- 

1 

Gardner  State  Colony, 

107 

41,868.00 

- 

1 

1 

105 

Gas  and  Electric  Light  Commis- 

12 

15.108.00 

_ 

1 

1 

10 

sioners. 

General      Insurance       Guaranty 

7 

7,380.00 

_ 

_ 

_ 

7 

Fund. 

Harbor  and  Land  Commission,    . 

43 

46,524.00 

- 

1 

1 

41 

Industrial  School  for  Boys,  . 

26 

15,678.00 

- 

- 

- 

26 

Industrial  School  for  Girls,  . 

71 

31,182.00 

- 

- 

2 

69 

Land  Court,  . 

6 

7,620.00 

6 

Lyman  School  for  Boys, 

74 

44,826.40 

1 

1 

5 

67 

Massachusetts    Agricultural    Col- 
lege. 

70 

82,990.00 

2 

- 

1 

67 

Massachusetts  Commission  for  the 
Blind. 

7 

6,712.00 

- 

- 

- 

7 

Massachusetts  Highway  Commis- 

129 

133,464.00 

_ 

_ 

_ 

129 

sion. 

Massachusetts  Hospital  School,     . 

64 

24,814.88 

- 

- 

1 

63 

Massachusetts  Insurance  Depart- 

48 

45,800.00 

_ 

_ 

5 

43 

ment. 

Massachusetts  Nautical  Training 

37 

24,210.00 

_ 

_ 

_ 

37 

School. 

Massachusetts  Normal  Art  School, 

22 

28,040.00 

1 

2 

1 

18 

Massachusetts  Reformatory, 

62 

60,248.00 

1 

1 

3 

57 

The  figure  given  in  this  column  is  the  total  sum  paid  in  wages  and  salaries  to  employees 
eligible  for  participation  in  the  proposed  retirement  system  minus  all  amounts  in  excess 
of  $30  a  week,  which,  under  the  terms  of  the  bills,  are  not  assessable  for  contributions  to  the 
retirement  fund. 


1911.1 


HOUSE  — No.  1400. 


21 


TABLE  I.    State  Employees  Eligible  for  Participation  in  Proposed 
Retirement  System  —  Continued. 


DEPARTMENTS. 

Total 
Num- 
ber 

Amount  of 
Salaries 
Assessable 
under 
Retirement 
System1 

Num- 
ber 70 
Years 
and 
Over 

Num- 
ber 
65-69 

Years 

Num- 
ber 
60-64 

Years 

Num- 
ber 
under 
60 
Years 

Massachusetts     School     for     the 

211 

$85,942.56 

_ 

_ 

1 

210 

Feeble-minded. 

Medfield  State  Asylum, 

255 

107,392.00 

- 

1 

2 

252 

Metropolitan  Park  Commission,    . 

634 

424,511.00 

7 

14 

18 

595 

Metropolitan  Water  and  Sewerage 

505 

432,144.00 

6 

3 

15 

481 

Board. 

Monson  State  Hospital, 

139 

59,819.56 

- 

1 

4 

134 

Northampton  State  Hospital, 

165 

68,044.00 

- 

1 

2 

162 

North  Tewksbury  School,     . 

1 

300.00 

- 

- 

- 

1 

Ordnance  Department, 

- 

- 

- 

- 

- 

- 

Pilot  Commissioners,     . 

- 

- 

- 

- 

- 

- 

Prison  Camp  and  Hospital,  . 

24 

16,800.00 

- 

- 

- 

24 

Prison  Commissioners,  . 

11 

12,640.00 

- 

- 

3 

8 

Probate  Courts,     .... 

103 

89,937.64 

1 

1 

3 

98 

Province  Laws,      .... 

5 

5,660.00 

1 

- 

1 

3 

Quartermaster's  Department, 

10 

8,730.00 

- 

- 

- 

10 

Quartermaster's  Armory  Division, 

32 

28,060.00 

- 

- 

- 

32 

Railroad  Commission,  . 

20 

28,044.00 

- 

2 

4 

14 

Reformatory  Prison  for  Women, 

24 

17,632.00 

- 

- 

1 

23 

Secretary  of  the  Commonwealth, 

30 

25,739.99 

1 

- 

- 

29 

Sergeant-at-Arms'  Department,    . 

63 

56,720.00 

- 

2 

3 

58 

State  Aid  and  Pension   Depart- 

6 

6,760.00 

_ 

_ 

_ 

6 

ment. 

State  Auditor's  Department, 

11 

14,000.00 

- 

1 

- 

10 

State  Board  of  Agriculture,   . 

10 

10,983.00 

- 

- 

1 

9 

State  Board  of  Charity, 

80 

80,960.00 

1 

3 

2 

74 

State  Board  of  Conciliation  and 

6 

7,680.00 

! 

_ 

_ 

5 

Arbitration. 

State  Board  of  Education,    . 

15 

21,000.00 

- 

3 

- 

12 

State  Board  of  Health, 

91 

93,323.00 

- 

- 

- 

91 

State  Board  of  Insanity, 

25 

26,780.00 

- 

1 

1 

23 

State  Farm  

- 

- 

- 

- 

- 

- 

State  Forester,        .... 

38 

37,124.00 

- 

- 

- 

38 

State  Infirmary,  Tewksbury, 

309 

123,252.20 

2 

4 

5 

298 

State  Library  of  Massachusetts,    . 

12 

11,256.00 

1 

1 

- 

10 

State  Normal  School,  Bridgewater, 

40 

34,341.00 

1 

- 

1 

38 

1  The  figure  given  in  this  column  is  the  total  sum  paid  in  wages  and  salaries  to  employees 
eligible  for  participation  in  the  proposed  retirement  system  minus  all  amounts  in  excess 
of  $30  a  week,  which,  under  the  terms  of  the  bills,  are  not  assessable  for  contributions  to  the 
retirement  fund. 


22 


RETIREMENT  SYSTEM. 


[Jan. 


TABLE  I.    State  Employees  Eligible  for  Participation  in  Proposed 
Retirement  System  —  Concluded. 


DEPARTMENTS. 

Total 
Num- 
ber 

Amount  of 
Salaries 
Assessable 
under 
Retirement 
System  l 

Num- 
ber 70 
Years 
and 
Over 

Num- 
ber 
65-69 

Years 

Num- 
ber 
60-64 

Years 

Num- 
ber 
under 
60 
Years 

State  Normal  School,  Fitchburg, 

30 

$32,120.00 

- 

1 

1 

28 

State   Normal   School,   Framing- 

35 

29,138.00 

- 

1 

- 

34 

State  Normal  School,  Hyannis,     . 

31 

30,803.60 

- 

- 

- 

31 

State  Normal  School,  Lowell, 

14 

16,080.00 

- 

- 

1 

13 

Bartlett    Training    School, 

20 

4,370.00 

- 

_ 

1 

19 

Lowell. 

State  Normal  School,  No.  Adams, 

39 

22,141.00 

- 

- 

- 

39 

State  Normal  School,  Salem, 

35 

27,916.00 

- 

- 

1 

34 

State  Normal  School,  Westfield, 

26 

21,200.00 

- 

1 

- 

25 

State    Normal    School,    Worces- 

15 

17,120.00 

_ 

1 

_ 

14 

ter. 

State  Prison  

28 

30,212.00 

2 

2 

- 

24 

State  Sanatorium,  Lakeville, 

68 

28,834.56 

- 

- 

2 

66 

State  Sanatorium,  No.  Reading, 

61 

26,204.00 

- 

- 

2 

59 

State  Sanatorium,  Rutland, 

181 

60,151.20 

- 

1 

- 

180 

State  Sanatorium,  Westfield, 

55 

24,672.80 

- 

- 

1 

54 

State  Treasurer's  Department,     . 

15 

17,960.00 

- 

1 

1 

13 

Surgeon-General's  Department,    . 

2 

2,580.00 

- 

- 

- 

2 

Surveyor  General  of  Lumber, 

18 

25,200.00 

1 

1 

1 

15 

Taunton  State  Hospital, 

227 

91,072.40 

2 

- 

- 

225 

Tax  Commissioner's  Department, 

54 

52,000.00 

- 

2 

1 

51 

Trustees   of   Massachusetts   Hos- 

2 

2,510.00 

_ 

_ 

_ 

2 

pitals  for  Consumptives. 
Wachusett  Mountain  State  Reser- 

4 

3,004.00 

4 

vation  Commission. 

Westborough  State  Hospital, 

306 

120,738.44 

- 

- 

1 

305 

Worcester  State  Asylum, 

288 

111,673.44 

- 

1 

- 

287 

Worcester  State  Hospital,      . 

297 

111,901.96 

3 

1 

7 

286 

Wrentham  State  School, 

38 

15,950.00 

- 

- 

- 

38 

6521 

$4,096,949.13 

39 

68 

131 

6,283 

1  The  figure  given  in  this  column  is  the  total  sum  paid  in  wages  and  salaries  to  employees 
eligible  for  participation  in  the  proposed  retirement  system  minus  all  amounts  in  excess 
of  $30  a  week,  which,  under  the  terms  of  the  bills,  are  not  assessable  for  contributions  to  the 
retirement  fund. 


1911.1 


HOUSE  — No.  1400. 


23 


The  number  of  county  employees  eligible  for  participation, 
as  shown  in  Table  II,  varies  widely,  from  3  in  Nantucket  to 
369  in  Suffolk.  Four  counties  —  Barnstable,  Franklin,  Nan- 
tucket,  and  Plymouth  —  have  no  employees  65  years  of  age 
and  over  eligible  for  retirement  under  the  assumption  that  has 
been  made.  Two  of  these  counties  —  Barnstable  and  Nan- 
tucket —  have  no  employees  in  the  age  group  60  to  64  years 
eligible  for  retirement  during  the  first  five  years  under  the  pre- 
vious assumption.  The  total  number  of  county  employees  eli- 
gible for  participation  is  1,155.  The  total  number  who  would 
be  retired  immediately  is  81,  including  42  in  the  age  group  70 
years  and  over  and  39  in  the  age  group  65  to  69  years.  The 
number  in  the  age  group  60  to  64  years  who  would  be  re- 
tired during  the  first  five  years,  as  it  has  been  assumed,  is  73. 
The  number  under  60  years  of  age  is  1,001. 

TABLE  II.     County  Employees  Eligible  for  Participation  in  Proposed 
Retirement  System. 


COUNTIES. 

Total 
Num- 
ber 

Amount  of 
Salaries 
Assessable 
under 
Retirement 
System  1 

Num- 
ber 70 
Years 
and 
Over 

Num- 
ber 
65-69 

Years 

Num- 
ber 
60-64 

Years 

Num- 
ber 
under 
60 
Years 

Barnstable  

9 

$4,756.00 

- 

i 

- 

9 

Berkshire,       

31 

20,802.75 

1 

- 

4 

26 

Bristol  

69 

56,215.00 

5 

3 

3 

58 

Dukes  

7 

764.00 

1 

2 

2 

2 

Essex,     

149 

103,357.00 

5 

1 

7 

136 

Franklin  

14 

8,948.00 

- 

- 

1 

13 

Hampden  

52 

41,656.00 

2 

3 

7 

40 

Hampshire  

21 

12,792.00 

2 

4 

3 

12 

Middlesex 

198 

171,619.00 

10 

3 

16 

169 

N&nt  u  ckfct 

3 

437.00 

3 

Norfolk  

89 

62,346.00 

3 

3 

3 

80 

Plymouth  

35 

26,844.00 

- 

- 

2 

33 

Suffolk  

369 

341,931.00 

9 

13 

20 

327 

Worcester,       

109 

80,907.00 

4 

7 

5 

93 

TOTALS,    

1,155 

$933,374.75 

42 

39 

73 

1,001 

1  The  figure  given  in  this  column  is  the  total  sum  paid  in  wages  and  salaries  to  employees 
eligible  for  participation  in  the  proposed  retirement  system  minus  all  amounts  in  excess 
of  $30  a  week,  which,  under  the  terms  of  the  bills,  are  not  assessable  for  contributions  to  the 
retirement  fund. 


24 


RETIREMENT  SYSTEM. 


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HOUSE  — No.  1400. 


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RETIREMENT  SYSTEM. 


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1911.1 


HOUSE  — No.  1400. 


27 


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APPENDIX 


SENATE   BILLS,   SESSION    OF    1910,   ON  WHICH  THE  IN 
VESTIGATION  AS  TO  COST  WAS  BASED. 

I 
The  system  as  proposed  for  The  Commonwealth. 

SENATE,  No.  376. 
2%  Qlomttumumtltlr  of 


AN   ACT   TO   ESTABLISH  A   RETIREMENT   SYSTEM   FOR  THE 
EMPLOYEES  OF  THE  COMMONWEALTH. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  in 
General  Court  assembled,  and  by  the  authority  of  the  same,  as 
follows: 

1  SECTION  1.     In  this  act,  unless  the  context  otherwise 

2  requires  :  — 

3  (a)  The  words  "retirement  system  "  mean  the  arrange- 

4  ments  provided  in  this  act  for  the  payment  of  pensions. 

5  (6)  The  word  "annuities"  means  the  payments  for  Me 

6  derived  from  money  contributed  by  the  employees. 

7  (c)  The  word  "pensions"  means  the  payments  for  life 

8  derived  from  money  contributed  by  the  general  court. 

9  (d)  The  words  "regular  interest"  mean  interest  at  three 

10  per  cent  per  annum   compounded   semi-annually  on  the 

11  last  days  of  December  and  June,  and  reckoned  for  full 

12  three  and  six  months'  periods  only. 

13  0)  The    words    "continuous    service"    mean    uninter- 

14  rupted   employment,    with   this   exception:     a   lay-off   on 

15  account  of  illness  or  reduction  of  force;    and  a  leave  of 

16  absence,    suspension   or   dismissal   followed    by   reinstate- 

17  ment  within  one  year  shall  not  be  considered  as  breaking 

18  the  continuity  of  service. 

ESTABLISHMENT   OF  RETIREMENT  SYSTEM. 

1  SECTION  2.    The    retirement    system    shall    be    estab- 

2  lished  on  the  first  day  of  January  or  the  first  day  of  July 

3  following  the  expiration  of  three  months  after  the  date 

4  on  which  this  act  takes  effect. 


58  RETIREMENT  SYSTEM.  [Jan. 


THE   RETIREMENT  ASSOCIATION. 

1  SECTION  3.     A  retirement  association  shall  be  organized 

2  among  the  employees  of  the  commonwealth  as  follows :  — 

3  (1)  All  employees  of  the  commonwealth,   on  the  date 

4  when  the  retirement  system  is  established,  may  become 

5  members  of  the  association.    On  the  expiration  of  sixty 

6  days  from  said  date  every  such  employee  shall  be  con- 

7  sidered  to  have  elected  to  become,  and  shall  thereby  be- 

8  come,  a  member,  unless  he  shall  have  within  that  period, 

9  sent  notice  in  writing  to  the  state  insurance  commissioner 

10  that  he  does  not  wish  to  join  the  association. 

11  (2)  All  employees  who  enter  the  service  of  the  common- 

12  wealth  after  the  date  when  the  retirement  system  is  estab- 

13  lished,  except  persons  who  have  already  passed  the  age  of 

14  fifty-five  years,  shall  upon  completing  thirty  days  of  ser- 

15  vice  become  thereby  members  of  the  association.     Persons 

16  over  fifty-five  years  of  age  who  enter  the  service  of  the 

17  commonwealth  after  the  establishment  of  the  retirement 

18  system  shall  not  be  allowed  to  become  members  of  the 

19  association,  and  no  such  employee  shall  remain  in  the  ser- 

20  vice  of  the  commonwealth  after  reaching  the  age  of  seventy 

21  years. 

22  (3)  No  officer  elected  by  popular  vote  may  become  a 

23  member  of  the  association,  nor  any  employee  who  is  or 

24  will  be  entitled  to  a  pension  from  the  commonwealth  for 

25  any  reason  other  than  membership  in  the  association. 

26  (4)  Any  member  who  reaches  the  age  of  sixty  years  and 

27  who  has  been  in  the  continuous  service  of  the  common- 

28  wealth  for  a  period  of  fifteen  years  immediately  preceding 

29  may  retire  or  may  be  retired  by  the  board  of  retirement, 

30  and  any  member  who  reaches  the  age  of  seventy  years 

31  must  so  retire. 

32  (5)  Any  member  who  has  completed  a  period  of  thirty- 

33  five  years  of  continuous  service  may  retire,   or  may  be 

34  retired  at  any  age  by  the  board  of  retirement  if  such  action 

35  be  deemed  advisable  for  the  good  of  the  service. 


1911.]  HOUSE  —  No.  1400.  59 


THE   BOARD   OF  RETIREMENT. 

1  SECTION  4.     (1)  The    management    of    the    retirement 

2  system  is  hereby  vested  in  the  board  of  retirement,  con- 

3  sist!ng  of  three  members,  one  of  whom  shall  be  the  state 

4  treasurer;    the  second  member  shall  be  a  member  of  the 

5  association  elected  by  the  latter  within  thirty  days  after 

6  the  date  on  which  the  retirement  system  is  established, 

7  in  a  manner  to  be  determined  by  the  state  insurance  com- 

8  missioner;   the  third  member  shall  be  chosen  by  the  other 

9  two  members.     In  case  of  the  failure  of  the  latter  to  choose 

10  the  third  member  within  thirty  days  after  the  election  of 

11  the  second  member,  the  governor  shall  appoint  such  third 

12  member.     The  first  person  so  chosen  or  appointed  as  third 

13  member  shall  serve  for  two  years;  otherwise  and  thereafter 

14  the  term  of  office  of  the  two  elected  members  shall  be  three 

15  years.     On  a  vacancy  occurring  in  the  board  for  any  cause 

16  or  on  the  expiration  of  the  term  of  office  of  any  member, 

17  a  successor  of  the  person  whose  place  has  become  vacant 

18  or  whose  term  has  expired  shall  be  chosen  in  the  same 

19  manner  as  his  predecessor. 

20  (2)  The  members  of  the  board  of  retirement  shall  serve 

21  without  compensation;    but  they  shall  be  reimbursed  out 

22  of  the  retirement  fund  for  any  expense  or  loss  of  salary 

23  or  wages  which  they  may  have  incurred  through  service  on 

24  the  board. 

25  (3)  The  state  treasurer  shall  have  charge  and  control 

26  of  the  funds  of  the  system,  subject  to  the  approval  of  the 

27  board   of  retirement,   and   shall   invest   and   reinvest   the 

28  same,  and  may  from  time  to  time  sell  any  securities  held 

29  by  him  and  invest  and  reinvest  the  proceeds  therefrom, 

30  and   any  and   all  unappropriated   income  of  said  funds: 

31  provided,  however,  that  all  funds  received  by  him  not  re- 

32  quired  for  current  disbursements  shall  be  invested  in  accord- 

33  ance  with  the  provisions  of  the  laws  of  this  commonwealth 

34  relating  to  the  investment  of  the  funds  of  savings  banks. 

35  He  shall  in  the  investment  of  the  funds  give  preference  to 

36  the  securities  of  the  commonwealth.     He  may,  whenever 

37  he  sells  such  securities,  deliver  the  securities  so  sold  upon 


60  RETIREMENT  SYSTEM.  [Jan. 

38  receiving  the  proceeds  thereof,  and  may  execute  any  and 

39  all  documents  necessary  to  transfer  the  title  thereto. 

40  (4)  The  board  of  retirement  shall  have  power  to  make 

41  by-laws  and  regulations  not  inconsistent  with  the  provi- 

42  sions  of  this  act,  and  to  employ  such  clerical  or  other  assist- 

43  ance  as  may  be  necessary  for  the  fulfilment  of  its  purposes. 

44  (5)  The  board  shall  determine  the  percentage  of  wages 

45  that  employees  shall  contribute  to  the  pension  fund,  sub- 

46  ject  to  the  minimum  and  maximum  percentages,  and  shall, 

47  furthermore,  have  the  power  to  classify  employees  for  the 

48  purposes  of  the  retirement  system  and  to  establish  differ- 

49  ent  rates  of  contribution  f or '  different  classes  within  the 

50  prescribed  limits. 

51  (6)  The  state  treasurer  shall,  in  January  of  each  year, 

52  unless  for   cause   the   insurance   commissioner   shall   have 

53  granted  an  extension  of  time,  file  in  the  office  of  the  insur- 

54  ance  commissioner  a  sworn  statement,  which  shall  exhibit 

55  the  financial  condition  of  the  retirement  system  on  the 

56  thirty-first  day  of  the  preceding  December,  and  its  finan- 

57  cial  transactions  for  the  year  ending  with  said  day.     Such 

58  statement  shall  be  in  a  form  approved  by  the  insurance 

59  commissioner,   and   shall   show,   among  other  things,   the 

60  liability  of  the  retirement  system  on  account  of  the  fol- 

61  lowing  items:  — 

A.    Deposit  Reserves. 

62  The  total  of  the  deposits  of  the  members  actually  re- 

63  ceived  by  the  treasurer  or  due  from  the  commonwealth 

64  under  section  five,  (2)  A,  and  held  subject  to  withdrawal 

65  by  such  members. 

B.  Interest  Reserve. 

66  Regular  interest  on  such  deposits. 

C.  Annuity  Reserve. 

67  The  net  value  of  the  annuities  entered  upon  under  section 

68  six,  (2)  B,  on  the  basis  of  the  mortality  tables  and  inter- 

69  est  rates  provided  for  in  this  act. 


^X 

1911.]  HOUSE  — No.  1400.  61 


D.     Contribution  Reserve. 

70  The  net  value  of  the  pensions  not  yet  entered  upon 

71  under  section  six,  (2)  C  (a),  on  the  basis  of  the  mortality 

72  and  withdrawal  tables  and  interest  rates  provided  for  in 

73  this  act. 

E.    Pension  Reserve. 

74  The  net  value  of  the  pensions  entered  upon  under  section 

75  six,  (2)  C  (a),  on  the  basis  of  the  mortality  tables  and  inter- 

76  est  rates  provided  for  in  this  act. 

F.    Expense  and  Contingent  Fund. 

77  (a)  The  unexpended  portion  of  the  amounts  received 

78  under  section  five,  (1). 

79  (b)  The  contingent  fund. 

G.     Gifts  and  Bequests. 

80  The  amounts  received   as   gifts   or  bequests   and  held 

81  under  the  terms  of  such  gifts  or  bequests. 

H.     Other  Liabilities. 

82  (a)  The    amounts    contributed    by    the    commonwealth 

83  under  section  five,  (2)  B  (c),  and  not  distributed. 

84  (6)  All  other  liabilities. 

/.     Surplus. 

85  (a)  Annuity  Surplus.  —  The  undistributed  surplus  aris- 

86  ing  from  annuity  deposits,  as  defined  in  section  five,  (2) 

87  B  (b). 

88  (b)  Pension  Surplus.  —  The  undistributed  surplus  aris- 

89  ing  from  pension  contributions,  as  defined  in  section  five, 

90  (2)  B  (b). 

91  (c)  Other  Surplus.  — All  unassigned  funds. 

CREATION   OF  THE   RETIREMENT  FUND. 

1  SECTION  5.     The  funds  of  the  retirement  system  shall 

2  be  raised  as  follows:- 


62  RETIREMENT  SYSTEM.  [Jan. 

(1)     Expense  and  Contingent  Fund. 

3  The  general  court  shall  appropriate  annually  such  an 

4  amount  as  may  be  necessary  to  defray  the  entire  expense 

5  of  administration,  according  to  estimates  prepared  by  the 

6  treasurer. 

(2)     Annuity  and  Pension  Fund. 

7  A.  Deposits  by  Members.  —  Each  member  shall  deposit 

8  in  this  fund  from  his  wages  or  salary,  as  often  as  the  same 

9  are  payable,  not  less  than  one  per  cent  and  not  more  than 

10  five  per  cent  of  the  amount  of  his  wages  or  salary  as  deter- 

11  mined  by  the  Board  of  Retirement  under  the  provisions 

12  of  section  four  (5):   provided,  however,  that  employees  who 

13  receive  more  than  thirty  dollars  weekly  in  wages  or  salary 

14  shall  not  be  assessed  for  contribution  to  this  fund  on  the 

15  excess  above  that  amount. 

16  B.     Contributions     of     the     Commonwealth.  —  (a)  Each 

17  month  the  commonwealth  shall  contribute  such  amount  as 

18  may  be  necessary  to  maintain  the  contribution  and  pension 

19  reserves  as  of  the  last  day  of  the  preceding  month,  on  the 

20  pensions  to  be  paid  under  section  six,  (2)  C  (a). 

21  (6)  Each   year,    in   January,    the    commonwealth    shall 

22  contribute  an  amount  equal  to  the  excess  of  the  surplus 

23  arising  from  annuity  deposits  over  the  surplus  arising  from 

24  pension  contributions.     The  said  surplus  arising  from  annu- 

25  ity  deposits  shall  be  the  sum  of  that  portion  of  the  interest 

26  reserve   released    by   the   withdrawal    of   members    under 

27  section  six,  (2)  A  (a),  and  the  interest  earned  during  the 

28  year  ending  December  thirty-first  next  preceding  on  the 

29  deposit  reserve  and  on  the  interest  reserve,  less  the  amount 

30  necessary  to  maintain,  during  said  year,  the  said  interest 

31  reserve.    The  said  surplus  arising  from  the  pension  con- 

32  tributions  shall  be  the  sum  of  the  gain  arising  during  said 

33  year  from  a  mortality  or  withdrawal  experience  among  the 

34  members  making  annuity  deposits  in  excess  of  that  expected, 

35  and  the  interest  earned  on  the  contribution  reserve  in  excess 

36  of  the  amount  required  to  maintain,  during  said  year,  the 

37  said   contribution   reserve.     If  for   any   year  the   surplus 

38  arising  from  pension  contributions  shall  be  found  to  be 


1911.]  HOUSE  — No.  1400.  63 

39  in   excess   of  the   surplus   arising  from   annuity  deposits, 

40  such  excess  shall  forthwith  be  paid  over  to  the  common- 

41  wealth. 

42  For  the  purposes  of  this  paragraph  the  board  of  retire- 

43  ment  shall  adopt,  subject  to  the  approval  of  the  insurance 

44  commissioner,    an   equitable   method    of   determining   the 

45  excess  interest  and  gain  from  mortality  and  withdrawal 

46  mentioned  therein. 

47  (c)  Each  month  the  commonwealth  shall  contribute  such 

48  amount  as  the  board  of  retirement  may  determine  to  be 

49  necessary  to  pay  current  pensions  for  prior  service  under 

50  section  six  (2)  C  (b):   provided,  that  any  amount  so  con- 

51  tributed  for  any  month  and  not  needed  for  pensions  for 

52  that  month  shall  be  credited  to  the  contribution  of  the 

53  commonwealth  for  the  succeeding  month. 

54  (d)  Each    month    the    commonwealth    shall    contribute 

55  such  amount  as  the  board  of  retirement  may  determine 

56  to  be  necessary  to  ensure  the  minimum  payments  pro- 

57  vided  for  in  section  six,  E. 

(3)     Provision  for  Payments. 

58  A.  All  amounts  payable  by  members  of  the  association 

59  under  paragraph  (2)  A  of  this  section  shall  be  deducted 

60  by  the  commonwealth  from  the  amounts  payable  to  them 

61  as  wages  or  salary,  as  often  as  the  same  are  payable,  and 

62  shall  be  immediately  credited  to  the  retirement  fund  by 

63  the  state  treasurer. 

64  B.  All  accrued  obligations  on  the  part  of  the  common- 

65  wealth  under  paragraphs  (1)  and  (2)  of  this  section  shall 

66  be   preferred    claims    against   the   commonwealth   in   like 

67  manner  as  claims  for  unpaid  wages  are  or  may  be  preferred. 

DISTRIBUTION   OF  FUNDS. 

1  SECTION  6.    The  state  treasurer  shall  administer  the  funds 

2  of  the  pension  system  in  accordance  with  the  following 

3  plan:  — 

(1)     Expenses  and  Contingent  Funds. 

4  The  funds  provided  for  under  section  five,  (1),  shall  be 

5  used,  so  far  as  may  be  necessary,  for  the  payment  of  the 


64  RETIREMENT  SYSTEM.  [Jan. 

6  expenses  of  administration.     The  portions  not  so  used,  if 

7  any,  shall  be  carried  to  the  contingent  fund,  any  portion 

8  of  which  may  be  transferred  to  any  other  fund  by  vote 

9  of  the  board  of  retirement.     In  case  the  amount  appro- 

10  priated  for  the  expense  fund  in  any  year  should  prove 

11  insufficient,   the  commonwealth  shall   appropriate   in  the 

12  following  year  such  additional  sum  as  may  be  required  to 

13  cover  the  deficit. 

(1)  Expense  and  Contingent  Funds. 

14  A.  Refunds.  —  (a)  Should    a    member    of    the    associa- 

15  tion  cease  to  be  an  employee  of  the  commonwealth  for  any 

16  cause  other  than  death  before  becoming  entitled  to  a  pen- 

17  sion,  there  shall  be  refunded  to  him  all  the  money  that 

18  has  been  paid  in  by  him  under  section  five,  (2)  A,  with 

19  regular  interest. 

20  (6)  Should  a  member  of  the  association  die  before  be- 

21  coming  entitled  to  a  pension,  there  shall  be  paid  to  his 

22  legal  representatives  all  the  money  that  has  been  paid  in 

23  by  him  under  section  five,   (2)  A,  with  such  interest  as 

24  shall  have  been  earned  on  such  deposits. 

25  B.  Annuities  from  Employees'  Deposits.  —  Any  member 

26  who  reaches  the  age  of  sixty  years  and  has  been  in  the 

27  continuous  service  of  the  commonwealth  for  fifteen  years 

28  immediately  preceding,  and  then  or  thereafter  retires  or 

29  is  retired,  any  member  who  retires  or  is  retired  at  the  age 

30  of  seventy  years,  and  any  member  who  is  retired  for  the 

31  good  of  the  service  under  the  provisions  of  section  three, 

32  (5),  shall  receive  an  annuity  to  which  the  sum  of  his  de- 

33  posits  under  section  five,  (2),  with  regular  interest,  shall 

34  entitle  him,  according  to  the  tables  adopted  by  the  board 

35  of  retirement,  in  one  of  the  following  forms:  — 

36  (a)  A  life  annuity,  payable  monthly. 

37  (6)  A  life  annuity,  payable  monthly,  with  the  provision 

38  that  in  the  event  of  the  death  of  the  annuitant  before 

39  receiving  payments  equal  to  the  sum  at  the  date  of  his 

40  retirement  of  his  deposits  under  section  five,  (2)  A,  with 

41  regular  interest,  the  difference  shall  be  paid  to  his  legal 

42  representatives. 


1911.]  HOUSE  — No.  1400.  65 

43  C.  Pensions  derived  from  Contributions  by  the  Common- 

44  wealth.  —  (a)  Pensions    based    upon    subsequent    service. 

45  Any  member  entitled  to  an  annuity  under  paragraph  (2) 

46  B  of  this  section  shall  receive  in  addition  thereto  a  pension 

47  for  life  payable  monthly  equivalent  to  that  annuity,  to 

48  be  paid  out  of  the  fund  contributed  by  the  commonwealth 

49  under  the  provisions  of  section  five,  (2)  B  (a). 

50  (b)  Pensions   based   upon   prior   service.     Any   member 

51  of  the  association  who  reaches  the  age  of  sixty  years,  hav- 

52  ing  been  in  the  continuous  service  of  the  commonwealth 

53  for  fifteen  years  or  more  immediately  preceding  and  then 

54  or  thereafter  retires  or  is  retired,  shall  receive  in  addition 

55  to  the  annuity  a  pension  provided  for  by  paragraphs  (2) 

56  B  and  C  (a)  of  this  section,  and  an  extra  pension  for  life 

57  as  large  as  the  amount  of  the  annuity  to  which  he  might 

58  have  acquired  a  claim  if  the  retirement  system  had  been 

59  in  operation  at  the  time  he  entered  the  service  of  the  com- 

60  monwealth,  and  if  accordingly  he  had  paid  regular  contribu- 

61  tions  from  that  date  to  the  date  of  the  establishment  of 

62  the  retirement  association  at  the  same  rate  as  that  first 

63  adopted  by  the  board  of  retirement,  and  if  such  deduc- 

64  tions  had  been  accumulated  with  regular  interest. 

65  Employees  who  had  already  reached  the  age  of  sixty 

66  years  at  the  time  the  retirement  system  was  established, 

67  and  employees  who  had  already  reached  the  age  of  fifty- 

68  five  years  at  that  date,  and  also  became  members  of  the 

69  association,   may  be  retired  under  the  provisions  of  the 

70  preceding  paragraph  without  having  completed  the  other- 

71  wise  required  service  period  of  fifteen  years.     For  the  pur- 

72  pose  of  computing  any  pension  payable  for  prior  service, 

73  the  board  of  retirement  may  estimate  on  the  basis  deter- 

74  mined  by  them  the  wages  received  at  any  period  for  which 

75  they  may  deem  it  impracticable  to  consult  the  original 

76  records. 

77  D.  Application  of  Surplus.  —  The  board  of  retirement 

78  shall  have  power  to  determine  the  application  of  any  sur- 

79  plus,  as  defined  under  section  four  (6)  /,  subject  to  the 

80  approval  of  the  insurance  commissioner. 

81  E.  Minimum   Payments.. —  In    no   case   shall   the   total 


66  RETIREMENT  SYSTEM.  [Jan. 

82  monthly  payment  to  a  member  be  at  a  rate  less  than  two 

83  hundred  dollars  per  year. 

84  F.  Association    Membership    and    Pension    Certificate.  — 

85  Membership  in  the  association  shall  be  evidenced  by  a 

86  certificate  to  be  issued  to  each  member  by  the  board  of 

87  retirement,  and  the  right  to  an  annuity  or  a  pension  shall 

88  be  evidenced  by  a  policy  to  be  issued  to  each  member  who 

89  retires  or  is  retired  by  the  board  of  retirement. 

TAXATION,  ATTACHMENTS  AND   ASSIGNMENTS. 

1  SECTION  7.     The  funds  of  the  retirement  system,  so  far 

2  as  they  are  invested  in  personal  property,  shall  be  exempt 

3  from  taxation. 

4  That  portion  of  the  wages  of  a  member  deducted  or  to 

5  be  deducted  under  this  act,  the  right  of  a  member  to  an 

6  annuity  or  pension,  and  all  his  rights  in  the  funds  of  the 

7  retirement   system   shall   be   exempt   from   taxation,    and 

8  from  the  operation  of  any  law  relating  to  bankruptcy  or 

9  insolvency,  and  shall  not  be  attached  or  taken  upon  execu- 

10  tion  or  other  process  of  any  court.     No  assignment  of  any 

11  right  in  or  to  said  funds  shall  be  valid. 

SUPERVISION  BY  INSURANCE   COMMISSIONER. 

1  SECTION  8.     The  insurance  commissioner  shall  prescribe 

2  for  the  retirement   system  of  the   commonwealth  one  or 

3  more  mortality  tables  and  one  or  more  tables  represent- 

4  ing  as  nearly  as  may  be  the  rates  of  withdrawal  of  em- 

5  ployees  from  the  service  of  the  commonwealth  for  reasons 

6  other  than  death,  and  shall  determine  what  rates  of  inter- 

7  est  shall  be  established  in  connection  with  such  tables,  and 

8  may  later  modify  such  tables  or  prescribe  other  tables  to 

9  represent  more  accurately  the  expense  of  the  retirement 

10  system,  or  may  change   said   rates  of  interest  and  may 

11  determine  the  application  of  the  changes  so  made.     He 

12  shall  also  prescribe  and  supervise  methods  of  bookkeeping 

13  of  the  retirement  association  formed  under  the  provisions 

14  of  this  act. 

15  The  insurance  commissioner  shall  at  least  once  in  each 


1911.]  HOUSE  — No.  1400.  67 

16  year,   either  personally  or  by  deputy  or   assistant,  thor- 

17  oughly  inspect  and  examine  the  affairs  of  the  retirement 

18  association  to  ascertain  its  financial  condition,  its  ability 

19  to  fulfil  its  obligations,  whether  all  parties  in  interest  have 

20  complied  with  the  provisions  of  law  applicable  to  the  retire- 

21  ment   association,    and   whether   the   transactions   of   the 

22  board   of  retirement  have   been  in   accordance  with   the 

23  rights  and  equities  of  those  in  interest.     The  retirement 

24  system  shall  be  credited,  in  the  account  of  its  financial 

25  condition,  with  the  amounts  due  from  the  commonwealth, 

26  under  the  provisions  of   section  five,  (2)  B  (a),  its  invest- 

27  ments  with  fixed  maturities  at  amortized  values,  and  its 

28  other  investments  at  a  reasonable  valuation. 

29  For  the  purposes  aforesaid,  the  insurance  commissioner 

30  or  other  persons  making  examination  shall  have  access  to 

31  all  the  securities,  books  and  papers  of  the  retirement  sys- 

32  tern,  and  may  summon  and  administer  oaths  and  examine 

33  as  witnesses  the  members  of  the  board  of  retirement  con- 

34  trol  or  any  other  person  relative  to  the  financial  affairs, 

35  transactions  and  conditions  of  the  retirement  system.     The 

36  insurance  commissioner  shall  preserve  in  a  permanent  form 

37  a  full  record  of  the  proceedings  at  such  examination,  and 

38  the  results  thereof.     Upon  the  completion  of  such  exam- 

39  ination,    verification    and    valuation,    the   insurance    com- 

40  missioner  shall  make  a  report  in  writing  of  his  findings  to 

41  the  board  of  retirement,  and  shall  send  a  copy  thereof 

42  to  the  governor  and  the  executive  council  of  the  common- 

43  wealth. 

1  SECTION  9.     If,  in  the  judgment  of  the  insurance  com- 

2  missioner,  the  commonwealth  or  the  board  of  retirement 

3  have  violated  or  neglected  to  comply  with  any  of  the  pro- 

4  visions  of  this  act,  or  of  the  rules  and  regulations  estab- 

5  lished  by  the  board  of  retirement  hereunder,  he  shall  give 

6  notice  thereof  to  the  commonwealth  and  to  the  board  of 

7  retirement,  and  thereafter  if  such  violation  or  neglect  con- 

8  tinues  shall  forthwith  present  the  facts  to  the  attorney- 

9  general  for  his  action. 


18  RETIREMENT  SYSTEM.  [Jan. 

1  SECTION  10.     The  superior  court  shall  have  jurisdiction 

2  in  equity  upon  petition  of  the  insurance  commissioner  or 

3  any  interested  party  to  compel  the  observance  and  restrain 

4  the  violation  of  this  act,  and  of  the  rules  and  regulations 

5  established  by  the  board  of  retirement  hereunder. 

1      SECTION  11.    This  act  shall  take  effect  upon  its  passage. 


1911.]  HOUSE  — No.  1400.  69 


SENATE,  No.  441. 
Wtie  (Enmmonumtltlj  of  iJJa0Hat!j«aptta . 

AN    ACT    TO    ESTABLISH    A    RETIREMENT    SYSTEM    FOR    THE 
EMPLOYEES  OF  THE  COMMONWEALTH. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  in 
General  Court  assembled,  and  by  the  authority  of  the  same,  as 
follows: 

1  SECTION  1.     In  this  act,  unless  the  context  otherwise 

2  requires :  — 

3  (a)  The  words  "retirement  system"  mean  the  arrange- 

4  ments  provided  in  this  act  for  the  payment  of  pensions. 

5  (6)  The  word  "annuities"  means  the  payments  for  life 

6  derived  from  money  contributed  by  the  employees. 

7  (c)  The  word  "pensions"  means  the  payments  for  life 

8  derived  from  money  contributed  by  the  commonwealth. 

9  (d)  The  words  "regular  interest"  mean  interest  at  three 

10  per  cent  per  annum   compounded   semi-annually  on  the 

11  last  days  of  December  and  June,  and  reckoned  for  full 

12  three  and  six  months'  periods  only. 

13  (e)  The    words    "continuous    service"    mean    uninter- 

14  rupted   employment,    with   this   exception:     a   lay-off   on 

15  account  of  illness  or  reduction  of  force;    and  a  leave  of 

16  absence,  suspension  or  dismissal  followed  by  reinstatement 

17  within  one  year  and  as  to  appointees  of  the  sergeant-at- 

18  arms  the  interval  between  sessions  of  the  general  court 

19  shall  not  be  considered  as  breaking  the  continuity  of  ser- 

20  vice. 

ESTABLISHMENT   OF   RETIREMENT   SYSTEM. 

1  SECTION  2.     The  retirement  system  shall  be  established 

2  on  the  first  day  of  January  or  the  first  day  of  July  fol- 

3  lowing  the  expiration  of  three  months  after  the  date  on 

4  which  this  act  takes  effect. 


70  RETIREMENT  SYSTEM.  [Jan. 


THE   RETIREMENT  ASSOCIATION. 

1  SECTION  3.    A   retirement   association   shall   be   organ- 

2  ized  among  the  employees  of  the  commonwealth  as  fol- 

3  lows:  — 

4  (1)  All  employees  of  the  commonwealth,   on  the  date 

5  when  the  retirement  system  is  established,  may  become 

6  members  of  the  association.    On  the  expiration  of  sixty 

7  days  from  said  date  every  such  employee  shall  be  con- 

8  sidered  to  have  elected  to  become,  and  shall  thereby  be- 

9  come,  a  member,  unless  he  shall  have,  within  that  period, 

10  sent  notice  in  writing  to  the  state  insurance  commissioner 

11  that  he  does  not  wish  to  join  the  association. 

12  (2)  All  employees  who  enter  the  service  of  the  com- 

13  monwealth  after  the  date  when  the  retirement  system  is 

14  established,  except  persons  who  have  already  passed  the 

15  age  of  fifty-five  years,  shall  upon  completing  thirty  days 

16  of   service   become   thereby   members   of  the   association. 

17  Persons  over  fifty-five  years  of  age  who  enter  the  service 

18  of  the  commonwealth  after  the  establishment  of  the  retire- 

19  ment  system  shall  not  be  allowed  to  become  members  of 

20  the  association,  and  no  such  employee  shall  remain  in  the 

21  service  of  the  commonwealth  after  reaching  the  age  of 

22  seventy  years. 

23  .  (3)  No  officer  elected  by  popular  vote  may  become  a 

24  member  of  the  association,  nor  any  employee  who  is  or 

25  will  be  entitled  to  a  pension  from  the  commonwealth  for 

26  any  reason  other  than  membership  in  the  association. 

27  (4)  Any  member  who  reaches  the  age  of  sixty  years  and 

28  who  has  been  in  the  continuous  service  of  the  common- 

29  wealth  or  of  any  institution  taken  over  by  the  common- 

30  wealth  for  a  period  'of  fifteen  years  immediately  preceding 

31  may  retire  or  may  be  retired  by  the  board  of  retirement, 

32  and  any  member  who  reaches  the  age  of   seventy  years 

33  must  so  retire. 

34  (5)  Any  member  who  has  completed  a  period  of  thirty- 

35  five  years  of  continuous  service  may  retire,   or  may  be 

36  retired  at  any  age  by  the  board  of  retirement  if  such  action 

37  be  deemed  advisable  for  the  good  of  the  service. 


1911.1  HOUSE  — No.  1400.  71 


THE   BOARD   OF  RETIREMENT. 

1  SECTION  4.     (1)  The    management    of    the    retirement 

2  system  is  hereby  vested  in  the  board  of  retirement,  con- 

3  sisting  of  three  members,  one  of  whom  shall  be  the  state 

4  treasurer;    the  second  member  shall  be  a  member  of  the 

5  association  elected  by  the  latter  within  thirty  days  after 

6  the  date  on  which  the  retirement  system  is  established, 

7  in  a  manner  to  be  determined  by  the  state  insurance  com- 

8  missioner;    the  third  member  shall  be  chosen  by  the  other 

9  two  members.     In  case  of  the  failure  of  the  latter  to  choose 

10  the  third  member  within  thirty  days  after  the  election  of 

11  the  second  member,  the  governor  shall  appoint  such  third 

12  member.     The  first  person  so  chosen  or  appointed  as  third 

13  member  shall  serve  for  two  years;    otherwise  and  there- 

14  after  the  term  of  office  of  the  two  elected  members  shall 

15  be  three  years.     On  a  vacancy  occurring  in  the  board  for 

16  any  cause  or  on  the  expiration  of  the  term  of  office  of  any 

17  member,  a  successor  of  the  person  whose  place  has  become 

18  vacant  or  whose  term  has  expired  shall  be  chosen  in  the 

19  same  manner  as  his  predecessor. 

20  (2)  The  members  of  the  board  of  retirement  shall  serve 

21  without  compensation;    but  they  shall  be  reimbursed  out 

22  of  the  contingent  fund  for  any  expense  or  loss  of  salary 

23  or  wages  which  they  may  have  incurred  through  service 

24  on  the  board. 

25  (3)  The  state  treasurer  shall  have  charge  and  control 

26  of  the  funds  of  the  system,  subject  to  the  approval  of  the 

27  board   of  retirement,   and   shall   invest   and   reinvest   the 

28  same,  and  may  from  time  to  time  sell  any  securities  held 

29  by  him  and  invest  and  reinvest  the  proceeds  therefrom, 

30  and   any  and   all  unappropriated   income   of  said  funds: 

31  provided,  however,  that  all  funds  received  by  him  not  re- 

32  quired  for  current  disbursements  shall  be  invested  in  accord- 

33  ance  with  the  provisions  of  the  laws  of  this  commonwealth 

34  relating  to  the  investment  of  the  funds  of  savings  banks. 

35  He  shall  in  the  investment  of  the  funds  give  preference 

36  to  the  securities  of  the  commonwealth.     He  may,  when- 

37  ever  he  sells  such  securities,  deliver  the  securities  so  sold 


72  RETIREMENT  SYSTEM.  [Jan. 

38  upon  receiving  the  proceeds  thereof,  and  may  execute  any 

39  and  all  documents  necessary  to  transfer  the  title  thereto. 

40  (4)  The  board  of  retirement  shall  have  power  to  make 

41  by-laws  and  regulations  not  inconsistent  with  the  provi- 

42  sions  of  this  act,  and  to  employ  such  clerical  or  other  assist- 

43  ance  as  may  be  necessary  for  the  fulfilment  of  its  purposes. 

44  (5)  The  board  shall  determine  the  percentage  of  wages 

45  that  employees  shall  contribute  to  the  pension  fund,  sub- 

46  ject  to  the  minimum  and  maximum  percentages,  and  shall, 

47  furthermore,  have  the  power  to  classify  employees  for  the 

48  purposes  of  the  retirement  system  and  to  establish  differ- 

49  ent  rates  of  contribution  for  different  classes  within  the 

50  prescribed  limits. 

51  (6)  The  state  treasurer  shall,  in  January  of  each  year, 

52  unless  for  cause  the   insurance   commissioner   shall   have 

53  granted  an  extension  of  time,  file  in  the  office  of  the  insur- 

54  ance  commissioner  a  sworn  statement,  which  shall  exhibit 

55  the  financial  condition  of  the  retirement  system  on  the 

56  thirty-first  day  of  the  preceding  December,  and  its  financial 

57  transactions   for   the   year   ending   with   said   day.     Such 

58  statement  shall  be  in  a  form  approved  by  the  insurance 

59  commissioner,   and   shall   show,   among   other  things,   the 

60  liability  of  the  retirement  system  on  account  of  the  fol- 

61  lowing  items:  — 

A.  Deposit  Reserves. 

62  The  total  of  the  deposits  of  the  members  actually  re- 

63  ceived  by  the  treasurer  or  due  from  the  commonwealth 

64  under  section  five,  (2)  A,  and  held  subject  to  withdrawal 

65  by  such  members. 

B.  Interest  Reserve. 

66  Regular  interest  on  such  deposits. 

C.  Annuity  Reserve. 

67  The  net  value  of  the  annuities  entered  upon  under  sec- 

68  tion  six,  (2)  B,  on  the  basis  of  the  mortality  tables  and 

69  interest  rates  provided  for  in  this  act. 


1911.]  HOUSE  — No.  1400.  73 


D.     Expense  and  Contingent  Fund. 

70  (a)  The  unexpended  portion  of  the  amounts  received 

71  under  section  five,  (1). 

72  (6)  The  contingent  fund. 

E.     Gifts  and  Bequests. 

73  The   amounts   received   as   gifts   or  bequests   and   held 

74  under  the  terms  of  such  gifts  or  bequests. 

F.     Other  Liabilities. 

75  All  other  liabilities. 

G.    Surplus. 

76  (a)  Annuity  Surplus.  —  The  undistributed  surplus  aris- 

77  ing  from  annuity  deposits,  as  defined  in  section  five,  (2) 

78  B  (b). 

79  (b)  Other  Surplus.  —  All  unassigned  funds. 

CREATION   OF  THE   RETIREMENT  FUND. 

1  SECTION  5.     The  funds  of  the  retirement  system  shall 

2  be  raised  as  follows :  — 

(1)     Expense  and  Contingent  Fund. 

3  The  general  court  shall  appropriate  annually  such  an 

4  amount  as  may  be  necessary  to  defray  the  entire  expense 

5  of  administration,  according  to  estimates  prepared  by  the 

6  treasurer. 

(2)     Annuity  and  Pension  Fund. 

7  A.  Deposits  by  Members.  —  Each  member  shall  deposit 

8  in  this  fund  from  his  wages  or  salary,  as  often  as  the  same 

9  are  payable,  not  less  than  one  per  cent  and  not  more  than 

10  five  per  cent  of  the  amount  of  his  wages  or  salary  as  deter- 

11  mined  by  the  board  of  retirement  under  the  provisions  of 

12  section  four   (5):    provided,   however,  that  employees  who 

13  receive  more  than  thirty  dollars  weekly  in  wages  or  sal- 

14  ary  shall  not  be  assessed  for  contribution  to  this  fund  on 

15  the  excess  above  that  amount. 


74  RETIREMENT  SYSTEM.  [Jan. 

16  B.  Contributions  of  the  Commonwealth.  —  (a)  Each  month 

17  the  commonwealth  shall  contribute  such  amount  as  the 

18  board  of  retirement  may  determine  to  be  necessary  to  pay 

19  current    pensions    for    subsequent    service,    under    section 

20  six  (2)  C  (a). 

21  (b)  Each    year,    in    January,    the    commonwealth    shall 

22  contribute  an  amount  equal  to  the  surplus  arising  from 

23  annuity  deposits;    in   case  there   should   be   a   deficiency 

24  arising  from  such  annuity  deposits,  instead  of  a  surplus, 

25  then  the  commonwealth  shall  make  good  such  deficiency. 

26  (c)  Each  month  the  commonwealth  shall  contribute  such 

27  amount  as  the  board  of  retirement  may  determine  to  be 

28  necessary  to  pay  current  pensions  for  prior  service  under 

29  section  six  (2)  C  (b). 

30  (d)  Each    month    the    commonwealth    shall    contribute 

31  such  amount  as  the  board  of  retirement  may  determine 

32  to  be  necessary  to  ensure  the  minimum  payments  pro- 

33  vided  for  in  section  six,  E. 

(3)     Provision  for  Payments. 

34  All   amounts   payable   by   members   of  the   association 

35  under  paragraph  (2)  A  of  this  section  shall  be  deducted 

36  by  the  commonwealth  from  the  amounts  payable  to  them 

37  as  wages  or  salary,  as  often  as  the  same  are  payable,  and 

38  shall  be  immediately  credited  to  the  retirement  fund  by 

39  the  state  treasurer. 

DISTRIBUTION   OF  FUNDS. 

1  SECTION  6.    The   state   treasurer   shall   administer   the 

2  funds  of  the  pension  system  in  accordance  with  the  fol- 

3  lowing  plan :  — 

(1)     Expenses  and  Contingent  Funds. 

4  The  funds  provided  for  under  section  five,    (1),   shall 

5  be  used,  so  far  as  may  be  necessary,  for  the  payment  of 

6  the  expenses  of  administration.     The  portions  not  so  used, 

7  if   any,  shall   be  carried  to  the  contingent  fund,  any  por- 

8  tion  of  which  may  be  transferred  to  any  other  fund  by 

9  vote   of  the   board   of  retirement.     In   case   the   amount 


1911.]  HOUSE  — No.  1400.  75 

10  appropriated   for   the   expense   fund   in   any  year   should 

11  prove  insufficient,  the  commonwealth  shall  appropriate  in 

12  the  following  year  such  additional  sum  as  may  be  required 

13  to  cover  the  deficit. 

(2)     Annuity  and  Pension  Funds. 

14  A.  Refunds. —  (a)  Should    a    member    of    the    associa- 

15  tion  cease  to  be  an  employee  of  the  commonwealth  for  any 

16  cause  other  than  death  before  becoming  entitled  to  a  pen- 

17  sion,  there  shall  be  refunded  to  him  all  the  money  that 

18  has  been  paid  in  by  him  under  section  five,  (2)  A,  with 

19  regular  interest. 

20  (b)  Should  a  member  of  the  association  die  before  be- 

21  coming  entitled  to  a  pension,  there  shall  be  paid  to  his 

22  legal  representatives  all  the  money  that  has  been  paid  in 

23  by  him  under  section  five,   (2)  A,  with  such  interest  as 

24  shall  have  been  earned  on  such  deposits. 

25  B.  Annuities  from  Employees'  Deposits.  —  Any  member 

26  who  reaches  the  age  of  sixty  years  and  has  been  in  the 

27  continuous  service  of  the  commonwealth  for  fifteen  years 

28  immediately  preceding,  and  then  or  thereafter  retires  or 

29  is  retired,  any  member  who  retires  or  is  retired  at  the  age 

30  of  seventy  years,  and  any  member  who  is  retired  for  the 

31  good  of  the  service  under  the  provisions  of  section  three, 

32  (5),  shall  receive  an  annuity  to  which  the  sum  of  his  de- 

33  posits  under  section  five,  (2),  with  regular  interest,  shall 

34  entitle  him,  according  to  the  tables  adopted  by  the  board 

35  of  retirement,  in  one  of  the  following  forms :  — 

36  (a)  A  life  annuity,  payable  monthly. 

37  (6)  A  life  annuity,  payable  monthly,  with  the  provision 

38  that  in  the  event  of  the  death  of  the  annuitant  before 

39  receiving  payments  equal  to  the  sum  at  the  date  of  his 

40  retirement  of  his  deposits  under  section  five,  (2)  A,  with 

41  regular  interest,  the  difference  shall  be  paid  to   his  legal 

42  representatives. 

43  C.  Pensions  derived  from  Contributions  by  the  Common- 

44  wealth.  —  (a)  Pensions    based    upon    subsequent    service. 

45  Any  member  entitled  to  an  annuity  under  paragraph  (2) 

46  B  of  this  section  shall  receive  in  addition  thereto  a  pension 


76  RETIREMENT  SYSTEM.  [Jan. 

47  for  life  payable  monthly  equivalent  to  that  annuity,  to 

48  be  paid  out  of  the  fund  contributed  by  the  commonwealth 

49  under  the  provisions  of  section  five,  (2)  B  (a). 

50  (b)  Pensions  based  upon  prior  service.     Any  member  of 

51  the  association  who  reaches  the  age  of  sixty  years,  having 

52  been  in  the  continuous  service  of  the  commonwealth  for 

53  fifteen  years  or  more  immediately  preceding  and  then  or 

54  thereafter  retires  or  is  retired,   shall  receive  in  addition 

55  to  the  annuity  and  pension  provided  for  by  paragraphs 

56  (2)  B  and  C  (a)  of  this  section,  an  extra  pension  for  life 

57  as  large  as  the  amount  of  the  annuity  to  which  he  might 

58  have  acquired  a  claim  if  the  retirement  system  had  been 

59  in  operation  at  the  time  he  entered  the  service  of  the  com- 

60  monwealth,  and  if  accordingly  he  had  paid  regular  con- 

61  tributions  from  that  date  to  the  date  of  the  establishment 

62  of  the  retirement  association  at  the  same  rate  as  that  first 

63  adopted  by  the  board  of  retirement,  and  if  such  deductions 

64  had  been  accumulated  with  regular  interest. 

65  Employees  who  had  already  reached  the  age  of  sixty 

66  years  at  the  time  the  retirement  system  was  established, 

67  and  employees  who  had  already  reached  the  age  of  fifty- 

68  five  years  at  that  date,  and  also  became  members  of  the 

69  association,  may  be  retired  under  the  provisions  of  the 

70  preceding  paragraph  without  having  completed  the  other- 

71  wise   required    service   period    of   fifteen   years.     For   the 

72  purpose  of  computing  any  pension  payable  for  prior  ser- 

73  vice,  the  board  of  retirement  may  estimate  on  the  basis 

74  determined  by  them  the  wages  received  at  any  period  for 

75  which  they  may  deem  it  impracticable  to  consult  the  origi- 

76  nal  records. 

77  D.  Application  of  Surplus.  —  The  board  of  retirement 

78  shall  have  power  to  determine  the  application  of  any  sur- 

79  plus,  as  defined  under  section  four  (6)  G,  subject  to  the 

80  approval  of  the  insurance  commissioner. 

81  E.  Minimum   Payments.  —  In   no   case   shall   the   total 

82  monthly  payment  to  a  member  be  at  a  rate  less  than  two 

83  hundred  dollars  per  year. 

84  F.  Association    Membership    and    Pension    Certificate.  — 

85  Membership  in  the  association  shall  be  evidenced  by  a 


1911.]  HOUSE  — No.  1400.  77 

86  certificate  to  be  issued  to  each  member  by  the  board  of 

87  retirement,  and  the  right  to  an  annuity  or  a  pension  shall 

88  be  evidenced  by  a  policy  to  be  issued  to  each  member  who 

89  retires  or  is  retired  by  the  board  of  retirement. 


TAXATION,    ATTACHMENTS  AND  ASSIGNMENTS. 

1  SECTION  7.     The  funds  of  the  retirement  system,  so  far 

2  as  they  are  invested  in  personal  property,  shall  be  exempt 

3  from  taxation. 

4  That  portion  of  the  wages  of  a  member  deducted  or  to 

5  be  deducted  under  this  act,  the  right  of  a  member  to  an 

6  annuity  or  pension,  and  all  his  rights  in  the  funds  of  the 

7  retirement   system   shall    be   exempt   from   taxation,    and 

8  from  the  operation  of  any  law  relating  to  bankruptcy  or 

9  insolvency,  and  shall  not  be  attached  or  taken  upon  execu- 

10  tion  or  other  process  of  any  court.     No  assignment  of  any 

11  right  in  or  to  said  funds  shall  be  valid. 

SUPERVISION  BY  INSURANCE   COMMISSIONER. 

1  SECTION  8.     The  insurance  commissioner  shall  prescribe 

2  for  the  retirement  system  of  the  commonwealth  one  or 

3  more  mortality  tables,  and  shall  determine  what  rates  of 

4  interest  shall  be  established  in  connection  with  such  tables, 

5  and  may  later  modify  such  tables  or  prescribe  other  tables 

6  to  represent  more  accurately  the  expense  of  the  retire- 

7  ment  system,  or  may  change  said  rates  of  interest  and 

8  may  determine  the  application  of  the  changes  so  made. 

9  He  shall  also  prescribe  and  supervise  methods  of  book- 

10  keeping  of  the  retirement  association  formed  under  the 

11  provisions  of  this  act. 

12  The  insurance  commissioner  shall  at  least  once  in  each 

13  year,  either  personally  or  by  deputy  or  assistant,  thoroughly 

14  inspect  and  examine  the  affairs  of  the  retirement  associa- 

15  tion  to  ascertain  its  financial  condition,  its  ability  to  fulfil 

16  its  obligations,  whether  all  parties  in  interest  have  complied 

17  with  the  provisions  of  law  applicable  to  the  retirement 

18  association,  and  whether  the  transactions  of  the  board  of 

19  retirement  have  been  in  accordance  with  the  rights  and 


78  RETIREMENT  SYSTEM.  [Jan. 

20  equities  of  those  in  interest.     The  retirement  system  shall 

21  be  credited,  in  the  account  of  its  financial  condition,  with 

22  the  amounts  due  from  the  commonwealth,  under  the  pro- 

23  visions  of  section  five,  (2)  B  (a),  its  investments  having 

24  fixed  maturities  upon  which  the  interest  is  not  in  default 

25  at  amortized  values,  and  its  other  investments  at  a  rea- 

26  sonable  valuation. 

27  For  the  purposes  aforesaid,  the  insurance  commissioner 

28  or  other  persons  making  examination  shall  have  access  to 

29  all  the  securities,  books  and  papers  of  the  retirement  sys- 

30  tern,  and  may  summon  and  administer  oaths  and  examine 

31  as  witnesses  the  members  of  the  board  of  retirement  con- 

32  trol  or  any  other  person  relative  to  the  financial  affairs, 

33  transactions  and  conditions  of  the  retirement  system.     The 

34  insurance  commissioner  shall  preserve  in  a  permanent  form 

35  a  full  record  of  the  proceedings  at  such  examination,  and 

36  the  results  thereof.     Upon  the  completion  of  such  exam- 

37  ination,    verification    and    valuation,    the   insurance    com- 

38  missioner  shall  make  a  report  in  writing  of  his  findings 

39  to  the  board  of  retirement,  and  shall  send  a  copy  thereof 

40  to  the  governor  and  the  executive  council  of  the  common- 

41  wealth. 

1  SECTION  9.     If,  in  the  judgment  of  the  insurance  com- 

2  missioner,  the  commonwealth  or  the  board  of  retirement 

3  have  violated  or  neglected  to  comply  with  any  of  the  pro- 

4  visions  of  this  act,  or  of  the  rules  and  regulations  estab- 

5  lished  by  the  board  of  retirement  hereunder,  he  shall  give 

6  notice  thereof  to  the  commonwealth  and  to  the  board  of 

7  retirement,  and  thereafter  if  such  violation  or  neglect  con- 

8  tinues  shall  forthwith  present  the  facts  to  the  attorney- 

9  general  for  his  action. 

1  SECTION  10.    The  superior  court  shall  have  jurisdiction 

2  in  equity  upon  petition  of  the  insurance  commissioner  or 

3  any  interested  party  to  compel  the  observance  and  restrain 

4  the  violation  of  this  act,  and  of  the  rules  and  regulations 

5  established  by  the  board  of  retirement  hereunder. 

1      SECTION  11.    This  act  shall  take  effect  upon  its  passage. 


1911.]  HOUSE  — No.  1400.  79 


II 
The  system  as  proposed  for  the  Counties. 

SENATE,  No.  375. 
Oil}*  GJommnnwralili  of  fHaBsadjuartta . 

AN  ACT  TO  AUTHORIZE  THE  COUNTIES  OF  THE  COMMON- 
WEALTH TO  ESTABLISH  RETIREMENT  SYSTEMS  FOR  THEIR 
EMPLOYEES. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  in 
General  Court  assembled,  and  by  the  authority  of  the  same,  as 
follows: 

1  SECTION  1.     In  this  act,   unless  the  context  otherwise 

2  requires :  — 

3  (a)  The  words  "retirement  system"  mean  the  arrange- 

4  ments  provided  in  this  act  for  the  payment  of  annuities 

5  and  pensions. 

6  (6)  The  word  "annuities"  means  the  payments  for  life 

7  derived  from  money  contributed  by  the  employees. 

8  (c)  The  word  "pensions"  means  the  payments  for  life 

9  derived  from  money  contributed  by  the  county. 

10  (d)  The  words  "regular  interest"  mean  interest  at  three 

11  per  cent  per  annum  compounded  semi-annually  on  the  last 

12  days  of  December  and  June,  and  reckoned  for  full  three 

13  and  six  months'  periods  only. 

14  (e)  The    words    "continuous    service"    mean    uninter- 

15  rupted   employment,    with   this   exception:     a   lay-off   on 

16  account  of  illness  or  reduction  of  force;    and  a  leave  of 

17  absence,    suspension   or   dismissal   followed    by   reinstate- 

18  ment  within  one  year,  shall  not  be  considered  as  breaking 

19  the  continuity  of  service. 

ESTABLISHMENT  OF  RETIREMENT  SYSTEM. 

1  SECTION  2.     Any   county   in   this   commonwealth   may 

2  establish  a  retirement  system  for  its  employees  by  accept- 

3  ing  the  provisions  of  this  act  in  the  manner  hereinafter 


80  RETIREMENT  SYSTEM.  [Jan. 

4  prescribed,  as  follows:    Upon  the  initiative  of  the  county 

5  commissioners,  the  question  of  acceptance  shall  be  sub- 

6  mitted  to  the  voters  of  the  county  at  the  next  election. 

7  The  vote  in  each  case  shall  be  in  answer  to  the  question, 

8  to  be  placed  upon  the  ballot:    "Shall  an  act  passed  by  the 

9  general  court  in  the  year ,  entitled  '  An  Act  authorizing 

10  the  counties  of  this  commonwealth  to  establish  retirement 

11  systems  for  their  employees,'  be  accepted?  "     If  a  majority 

12  of  the  voters  voting  thereon  at  such  election  shall  vote 

13  in  the  affirmative,  this  act  shall  take  effect  in  such  county, 

14  as  hereinafter  provided.     A  copy  of  the  vote,   sworn  to 

15  by  the  county  commissioners  or  the  officers  corresponding 

16  thereto,  shall,  within  thirty  days  after  the  date  of  the  vote, 

17  be  filed  in  the  office  of  the  insurance  commissioner  of  this 

18  commonwealth.     The  latter  shall  forthwith  issue  a  certi- 

19  ficate  that  the  retirement  system  is  declared  established 

20  in  such  county,  to  become  operative  on  the  first  day  of 

21  January  or  the  first  day  of  July  following  the  expiration 

22  of  three  months  after  the  date  of  such  certificate. 

THE  RETIREMENT  ASSOCIATION. 

1  SECTION  3.    Whenever  a   county   shall   have   voted   to 

2  establish    a    retirement    system    under    the    provisions    of 

3  section  two,   a  retirement  association  shall  be  organized 

4  as  follows :  — 

5  (1)  All  employees  of  the  county,  on  the  date  when  the 

6  retirement  system  is  declared  established  by  the  issue  of 

7  the  certificate,  as  provided  in  section  two,  may  become 

8  members  of  the  association.     On   the  expiration   of   sixty 

9  days  from  said  date  every  such  employee  shall  be  considered 

10  to  have  elected  to  become,  and  shall  thereby  become,  a 

11  member,  unless  he  shall  have,   within  that  period,   sent 

12  notice  in  writing  to  the  local  election  commissioners  or  the 

13  officers  corresponding  thereto  that  he  does  not  wish  to 

14  join  the  association. 

15  (2)  All  employees  who  enter  the  service  of  the  county 

16  after  the   date   when  the  retirement   system   is   declared 

17  established  by  the  issue  of  the  certificate,  as  provided  in 

18  section  two,  except  persons  who  have  already  passed  the 


1911.]  HOUSE  — No.  1400.  81 

19  age  of  fifty-five  years,  shall  upon  completing  thirty  days 

20  of  service  become  thereby  members  of  the  association.     Per- 

21  sons  over  fifty-five  years  of  age  who  enter  the  service  of 

22  the  county  after  the  establishment  of  the  retirement  sys- 

23  tern  shall  not  be  allowed  to  become  members  of  the  asso- 

24  ciation,  and  no  such  employee  shall  remain  'in  the  service 

25  of  the  county  after  reaching  the  age  of  seventy  years. 

26  (3)  No  officer  elected  by  popular  vote  may  become  a 

27  member  of  the  association,  nor  any  employee  who  is  or 

28  will  be  entitled  to  a  pension  from  the  county  for  any  rea- 

29  son  other  than  membership  in  the  association. 

30  (4)  Any  member  who  reaches  the  age  of  sixty  years  and 

31  who  has  been  in  the  continuous  service  of  the  county  for 

32  a  period  of  fifteen  years  immediately  preceding  may  retire 

33  or  may  be  retired  by  the  board  of  retirement,  and  any  mem- 

34  ber  who  reaches  the  age  of  seventy  years  must  so  retire. 

35  (5)  Any  member  who  has  completed  a  period  of  thirty- 

36  five  years  of  continuous  service  may  retire,   or  may  be 

37  retired  at  any  age  by  the  board  of  retirement  if  such  action 

38  be  deemed  advisable  for  the  good  of  the  service. 

THE   BOARD   OF  RETIREMENT. 

1  SECTION  4.     (1)  The  management  of  the  retirement  sys- 

2  tern  is  hereby  vested  in  the  board  of  retirement,  consist- 

3  ing  of  three  members,  one  of  whom  shall  be  the  county 

4  treasurer;    the  second  member  shall  be  a  member  of  the 

5  association  elected  by  the  latter  within  thirty  days  after 

6  the  date  when  the  retirement  system  is  declared  established 

7  by  the  issue  of  the  certificate,  as  provided  under  section 

8  two,  in  a  manner  to  be  determined  by  the  county  commis- 

9  sioners;    the  third  member  shall  be  chosen  by  the  other 

10  two  members.     In  case  of  the  failure  of  the  latter  to  choose 

11  the  third  member  within  thirty  days  after  the  election 

12  of  the  second  member,  the  chairman  of  the  county  com- 

13  missioners   shall   appoint   such   third   member.     The   first 

14  person  so  chosen  or  appointed  as  third  member  shall  serve 

15  for  two  years;    otherwise  and  thereafter  the  term  of  office 

16  of  the  two  elected  members  shall  be  three  years.     On  a 

17  vacancy  occurring  in  the  board  for  any  cause  or  on  the 


82  RETIREMENT  SYSTEM.  [Jan. 

18  expiration  of  the  term  of  office  of  any  member,  a  successor 

19  of  the  person  whose  place  has  become  vacant  or  whose 

20  term  has  expired  shall  be  chosen  in  the  same  manner  as 

21  was  his  predecessor. 

22  (2)  The  members  of  the  board  of  retirement  shall  serve 

23  without  compensation;    but  they  shall  be  reimbursed  out 

24  of  the  retirement  fund  for  any  expense  or  loss  of  salary 

25  or  wages  which  they  may  have  incurred  through  service 

26  on  the  board. 

27  (3)  The  county  treasurer  shall  have  charge  and  control 

28  of  the  funds  of  the  system,  subject  to  the  approval  of  the 

29  board   of  retirement,   and   shall  invest   and   reinvest   the 

30  same,  and  may  from  time  to  time  sell  any  securities  held 

31  by  him  and  invest  and  reinvest  the  proceeds  therefrom, 

32  and  any  and  all  unappropriated  income  of  said  funds:  pro- 

33  mded,  however,  that  all  funds  received  by  him  not  required 

34  for  current  disbursements  shall  be  invested  in  accordance 

35  with  the  provisions   of  the   laws   of  this   commonwealth 

36  relating  to  the  investment  of  the.  funds  of  savings  banks. 

37  He  shall  in  the  investment  of  the  funds  give  preference  to 

38  the  securities  of  the  county.     He  may,  whenever  he  sells 

39  such  securities,  deliver  the  securities  so  sold  upon  receiving 

40  the  proceeds  thereof,  and  may  execute  any  and  all  docu- 

41  ments  necessary  to  transfer  the  title  thereto. 

42  (4)  The  board  of  retirement  shall  have  power  to  make 

43  by-laws  and  regulations  not  inconsistent  with  the  provisions 

44  of  this  act,  and  to  employ  such  clerical  or  other  assistance 

45  as  may  be  necessary  for  the  fulfilment  of  its  purposes. 

46  (5)  The  board  shall  determine  the  percentage  of  wages 

47  that  employees  shall  contribute  to  the  pension  fund,  sub- 

48  ject  to  the  minimum  and  maximum  percentages,  and  shall, 

49  furthermore,  have  the  power  to  classify  employees  for  the 

50  purposes  of  the  retirement  system  and  to  establish  different 

51  rates  of  contribution  for  different  classes  within  the  pre- 
52  scribed  limits. 

53  (6)  The  county  treasurer  shall,  in  January  of  each  year, 

54  unless  for  cause   the   insurance   commissioner   shall   have 

55  granted  an  extension  of  time,  file  in  the  office  of  the  insur- 

56  ance  commissioner  a  sworn  statement,  which  shall  exhibit 


1911.]  HOUSE  — No.  1400.  83 

57  the  financial  condition  of  the  retirement  system  on  the 

58  thirty-first  day  of  the  preceding  December,  and  its  finan- 

59  cial  transactions  for  the  year  ending  with  said  day.     Such 

60  statement  shall  be  in  a  form  approved  by  the  insurance 

61  commissioner,   and   shall   show,   among  other  things,   the 

62  liability  of  the  retirement  system  on  account  of  the  following 

63  items:- 

A.  Deposit  Reserve. 

64  The  total  of  the  deposits  of  the  members  actually  re- 

65  ceived  by  the  treasurer  or  due  from  the  county  under 

66  section  five,    (2)   A,  and  held  subject  to  withdrawal  by 

67  such  members. 

B.  Interest  Reserve. 

68  Regular  interest  on  such  deposits. 

C.  Annuity  Reserve. 

69  The  net  value  of  the  annuities  entered  upon  under  sec- 

70  tion  six,  (2)  B,  on  the  basis  of  the  mortality  tables  and 

71  interest  rates  provided  for  in  this  act. 

D.     Contribution  Reserve. 

72  The  net  value  of  the  pensions  not  yet  entered  upon  under 

73  section  six,  (2)  C  (a),  on  the  basis  of  the  mortality  and 

74  withdrawal  tables  and  interest  rates  provided  for  in  this 

75  act. 

E.    Pension  Reserve. 

76  The  net  value  of  the  pensions  entered  upon  under  sec- 

77  tion  six,  (2)  C  (a),  on  the  basis  of  the  mortality  tables  and 

78  interest  rates  provided  for  in  this  act. 

F.     Expense  and  Contingent  Fund. 

79  (a)  The  unexpended  portion   of  the  amounts  received 

80  under  section  five,  (1). 

81  (b)  The  contingent  fund. 

G.     Gifts  and  Bequests. 

82  The   amounts   received   as   gifts   or   bequests   and   held 

83  under  the  terms  of  such  gifts  or  bequests. 


84  RETIREMENT  SYSTEM.  [Jan. 


H.     Other  Liabilities. 

84  (a)  The    amounts    contributed    by    the    commonwealth 

85  under  section  five,  (2)  B  (c),  and  not  distributed. 

86  (6)  All  other  liabilities. 

/.     Surplus. 

87  (a)  Annuity  Surplus.  —  The  undistributed  surplus  aris- 

88  ing  from  annuity  deposits,  as  defined  in  section  five,  (2) 

89  B  (6). 

90  (6)  Pension  Surplus.  —  The  undistributed  surplus  aris- 

91  ing  from  pension  contributions,  as  defined  in  section  five, 

92  (2)  B  (b). 

93  (c)  Other  Surplus.  —  All  unassigned  funds. 

CREATION   OF  THE   RETIREMENT   FUND. 

1  SECTION  5.     The  funds  of  the  retirement  system  shall 

2  be  raised  as  follows :  — 

(1)     Expense  and  Contingent  Fund. 

3  The  county  shall  appropriate  annually  such  an  amount 

4  as  may  be  necessary  to  defray  the  entire  expense  of  admin- 

5  istration,  according  to  estimates  prepared  by  the  treasurer. 

(2)     Annuity  and  Pension  Fund. 

6  A.    Deposits  by  Members.  —  Each  member  shall  deposit 

7  in  this  fund  from  his  wages  or  salary,  as  often  as  the  same 

8  are  payable,  not  less  than  one  per  cent  and  not  more  than 

9  five  per  cent  of  the  amount  of  his  wages  or  salary  as  deter- 

10  mined  by  the  board  of  retirement  under  the  provisions  of 

11  section  four   (5):    provided,  however,  that  employees  who 

12  receive  more  than  thirty  dollars  weekly  in  wages  or  salary 

13  shall  not  be  assessed  for  contribution  to  this  fund  on  the 

14  excess  above  that  amount. 

15  B.  Contributions   by  the  County.  —  (a)   Each  month  the 

16  county  shall  contribute  such  amount  as  may  be  necessary 

17  to  maintain  the  contribution  and  pension  reserves  as  of 

18  the  last  day  of  the  preceding  month,  on  the  pensions  to 

19  be  paid  under  section  six,  (2)  C  (a). 


1911.]  HOUSE  — No.  1400.  85 

20  (6)  Each  year,  in  January,  the  county  shall  contribute 

21  an  amount  equal  to  the  excess  of  the  surplus  arising  from 

22  annuity  deposits  over  the  surplus  arising  from  pension  con- 

23  tributions.     The  said  surplus  arising  from  annuity  deposits 

24  shall  be  the  sum  of  that  portion  of  the  interest  reserve 

25  released  by  the  withdrawal  of  members  under  section  six, 

26  (2)  A  (a),  and  the  interest  earned  during  the  year  ending 

27  December  thirty-first  next  preceding  on  the  deposit  reserve 

28  and  on  the  interest  reserve,  less  the  amount  necessary  to 

29  maintain,  during  said  year,  the  said  interest  reserve.     The 

30  said  surplus  arising  from  the  pension  contributions  shall 

31  be  the  sum  of  the  gain  arising  during  said  year  from  a 

32  mortality  or  withdrawal  experience  among  the  members 

33  making  annuity  deposits  in  excess  of  that  expected,  and 

34  the  interest  earned  on  the  contribution  reserve  in  excess 

35  of  the  amount  required  to  maintain,  during  said  year,  the 

36  said   contribution   reserve.     If  for   any   year  the   surplus 

37  arising  from  pension  contributions  shall  be  found  to  be 

38  in  excess  of  the  surplus  arising  from  annuity  deposits,  such 

39  excess  shall  forthwith  be  paid  over  to  the  county. 

40  For  the  purposes  of  this  paragraph  the  board  of  retire- 

41  ment  shall  adopt,  subject  to  the  approval  of  the  insurance 

42  commissioner,    an   equitable   method   of   determining   the 

43  excess  interest  and   gain  from  mortality  and  withdrawal 

44  mentioned  therein. 

45  (c)  Each  month  the  county  shall  contribute  such  amount 

46  as  the  board  of  retirement  may  determine  to  be  necessary 

47  to  pay  current  pensions  for  prior  service  under  section 

48  six,  (2)  C  (b):    provided,  that  any  amount  so  contributed 

49  for  any  month  and  not  needed  for  pensions  for  that  month 

50  shall  be  credited  to  the  contribution  of  the  county  for  the 

51  succeeding  month. 

52  (d)  Each  month  the  county  shall  contribute  such  amount 

53  as  the  board  of  retirement  may  determine  to  be  necessary 

54  to  ensure  the  minimum  payments  provided  for  in  section 

55  six,  E. 

(3)     Provision  for  Payments. 

56  A.  All  amounts  payable  by  members  of  the  association 

57  under  paragraph  (2)  A  of  this  section  shall  be  deducted 


86  RETIREMENT  SYSTEM.  [Jan. 

58  by  the  county  from  the  amounts  payable  to  them  as  wages 

59  or  salary,  as  often  as  the  same  are  payable,  and  shall  be 

60  immediately  credited  to  the  pension  fund  by  the  county 

61  treasurer. 

62  B.  All  accrued  obligations  on  the  part  of  the  county 

63  under  paragraphs  (1)  and  (2)  of  this  section  shall  be  pre- 
64  ferred  claims  against  the  county  in  like  manner  as  claims 
65  for  unpaid  wages  are  or  may  be  preferred. 

DISTRIBUTION  OF  FUNDS. 

1  SECTION  6.     The  county  treasurer  shall  administer  the 

2  funds  of  the  retirement  system  in  accordance  with  the  fol- 

3  lowing  plan :  — 

(1)     Expense  and  Contingent  Funds. 

4  The  funds  provided  for  under  section  five,  (1),  shall  be 

5  used,  so  far  as  may  be  necessary,  for  the  payment  of  the 

6  expenses  of  administration.     The  portions  not  so  used,  if 

7  any,  shall  be  carried  to  the  contingent  fund,  any  portion 

8  of  which  may  be  transferred  to  any  other  fund  by  vote  of 

9  the  board  of  retirement.     In  case  the  amount  appropriated 

10  for  the  expense  fund  in  any  year  should  prove  insufficient, 

11  the  county  shall  appropriate  in  the  following  year  such 

12  additional  sum  as  may -be  required  to  cover  the  deficit. 

(2)     Annuity  and  Pension  Funds. 

13  A.  Refunds.  —  (a)  Should  a  member  of  the  association 

14  cease  to  be  an  employee  of  the  county  for  any  cause  other 

15  than  death  before  becoming  entitled  to  a  pension,  there 

16  shall  be  refunded  to  him  all  the  money  that  has  been  paid 

17  in  by  him  under  section  five,  (2)  A,  with  regular  interest. 

18  (b)  Should  a  member  of  the  association  die  before  becom- 

19  ing  entitled  to  a  pension,  there  shall  be  paid  to  his  legal 

20  representatives  all  the  money  that  has  been  paid  in  by 

21  him  under  section  five,  A,  with  such  interest  as  shall  have 

22  been  earned  on  such  deposits. 

23  B.  Annuities  from  Employees'  Deposits.  —  Any  member 

24  who  reaches  the  age  of  sixty  years  and  has  been  in  the  con- 

25  tinuous  service  of  the  county  for  fifteen  years  immediately 


1911.]  HOUSE  — No.  1400.  87 

26  preceding,  and  then  or  thereafter  retires  or  is  retired,  any 

27  member  who  retires  or  is  retired  at  the  age  of  seventy  years, 

28  and  any  member  who  is  retired  for  the  good  of  the  service 

29  under  the  provisions  of  section  three,  (5),  shall  receive  an 

30  annuity  to  which  the  sum  of  his  deposits  under  section 

31  five,  (2),  with  regular  interest,  shall  entitle  him,  according 

32  to  the  tables  adopted  by  the  board  of  retirement,  in  one 

33  of  the  following  forms :  — 

34  (a)  A  life  annuity,  payable  monthly. 

35  (6)  A  life  annuity,  payable  monthly,  with  the  provision 

36  that  in  the  event  of  the  death  of  the  annuitant  before  re- 

37  ceiving  payments  equal  to  the  sum  at  the  date  of  his  retire- 

38  ment  of  his  deposits  under  section  five,  (2)  A,  with  regular 

39  interest,  the  difference  shall  be  paid  to  his  legal  representa- 

40  tives. 

41  C.  Pensions  derived  from  Contributions  by  the  County.  — 

42  (a)  Pensions  based  upon,  subsequent  service.     Any  member 

43  entitled  to  an  annuity  under  paragraph  (2)  B  of  this  section 

44  shall  receive  in  addition  thereto  a  pension  for  life  payable 

45  monthly  equivalent  to  that  annuity,  to  be  paid  out  of  the 

46  fund  contributed  by  the  county  under  the  provisions  of 

47  section  five,  (2)  B  (a). 

48  (6)  Pensions  based  upon  prior  service.     Any  member  of 

49  the  association  who  reaches  the  age  of  sixty  years,  having 

50  been  in  the  continuous  service  of  the  county  for  fifteen  years 

51  or  more  immediately  preceding,   and  then   or  thereafter 

52  retires  or  is  retired,  shall  receive  in  addition  to  the  annu- 

53  ity  a  pension  provided  for  by  paragraphs  (2)  B  and  C  (a) 

54  of  this  section,  and  an  extra  pension  for  life  as  large  as  the 

55  amount  of  the  annuity  to  which  he  might  have  acquired 

56  a  claim  if  the  retirement  system  had  been  in  operation  at 

57  the  time  he  entered  the  service  of  the  county,  and  if  ac- 

58  cordingly   he   had   paid   regular   contributions   from   that 

59  date  to  the  date  of  the  establishment  of  the  retirement 

60  association  at  the  same  rate  as  that  first  adopted  by  the 

61  board  of  retirement,  and  if  such  deductions  had  been  accu- 

62  mulated  with  regular  interest. 

63  Employees  who  had  already  reached  the  age  of  sixty 

64  years  at  the  time  the  retirement  system  was  established, 


88  RETIREMENT  SYSTEM.  [Jan. 

65  and  employees  who  had  already  reached  the  age  of  fifty- 

66  five  years  at  that  date  and  also  became  members  of  the 

67  association,  may  be  retired  under  the  provisions  of  the 

68  preceding  paragraph  without  having  completed  the  other- 

69  wise  required  service  period  of  fifteen  years.     For  the  pur- 

70  pose  of  computing  any  pension  payable  for  prior  service, 

71  the  board  of  retirement  may  estimate  on  the  basis  deter- 

72  mined  by  them  the  wages  received  at  any  period  for  which 

73  they  may  deem  it  impracticable  to  consult  the  original 

74  records. 

75  D.  Application  of  Surplus.  —  The  board  of  retirement 

76  shall  have  power  to  determine  the  application  of  any  sur- 

77  plus,  as  defined  under  section  four,  (6)  /,  subject  to  the 

78  approval  of  the  insurance  commission. 

79  E.  Minimum  Payments.  —  In   no   case   shall   the   total 

80  monthly  payment  to  a  member  be  at  a  rate  less  than  two 

81  hundred  dollars  per  year. 

82  F.  Association    Membership    and    Pension    Certificate.  - 

83  Membership  in  the  association  shall  be  evidenced  by  a 

84  certificate  to  be  issued  to  each  member  by  the  board  of 

85  retirement,  and  the  right  to  an  annuity  or  a  pension  shall 

86  be  evidenced  by  a  policy  to  be  issued  to  each  member  who 

87  retires  or  is  retired  by  the  board  of  retirement. 

TAXATION,  ATTACHMENTS  AND   ASSIGNMENTS. 

1  SECTION  7.     The  funds  of  the  retirement  system,  so  far 

2  as  they  are  invested  in  personal  property,  shall  be  exempt 

3  from  taxation. 

4  That  portion  of  the  wages  of  a  member  deducted  or  to 

5  be  deducted  under  this  act,  the  right  of  a  member  to  an 

6  annuity  or  pension,  and  all  his  rights  in  the  fund  of  the 

7  retirement  system  shall  be  exempt  from  taxation,  and  from 

8  the  operation  of  any  law  relating  to  bankruptcy  or  insol- 

9  vency,  and  shall  not  be  attached  or  taken  upon  execution 

10  or  other  process  of  any  court.     No  assignment  of  any  right 

11  in  or  to  said  funds  shall  be  valid. 


1911.]  HOUSE  — No.  1400.  89 


SUPERVISION  BY  INSURANCE   COMMISSIONER. 

1  SECTION  8.    The  insurance  commissioner  shall  prescribe 

2  for  each  county  that  adopts  a  retirement  system  under  the 

3  provisions  of  this  act  one  or  more  mortality  tables  and 

4  one  or  more  tables  representing  as  nearly  as  may  be  the 

5  rates  of  withdrawal  of  employees  from  the  service  of  the 

6  county  for  reasons  other  than  death,  and  shall  determine 

7  what  rates  of  interest  shall  be  established  in  connection 

8  with  such  tables,  and  may  later  modify  such  tables  or  pre- 

9  scribe  other  tables  to  represent  more  accurately  the  expense 

10  of  the  pension  system,  or  may  change  said  rates  of  interest 

1 1  and  may  determine  the  application  of  the  changes  so  made. 

12  He  shall  also  prescribe  and  supervise  methods  of  bookkeep- 

13  ing  of  each  retirement  association  formed  under  the  pro- 

14  visions  of  this  act. 

15  The  insurance  commissioner  shall  at  least  once  in  each 

16  year,  either  personally  or  by  deputy  or  assistant,  thor- 

17  oughly  inspect  and  examine  the  affairs  of  the  retirement 

18  association  to  ascertain  its  financial  condition,  its  ability 

19  to  fulfill   its   obligations,   whether  all  parties  in  interest 

20  have  complied  with  the  provisions  of  law  applicable  to  the 

21  association,  and  whether  the  transactions  of  the  board  of 

22  retirement  have  been  in  accordance  with  the  rights  and 

23  equities  of  those  in  interest.     The  retirement  system  shall 

24  be  credited,  in  the  account  of  its  financial  condition,  with 

25  the  amounts  due  from  the  county,  under  the  provisions 

26  of  section  five,  (2)  B  (a),  its  investments  with  fixed  maturi- 

27  ties  at  amortized  values,  and  its  other  investments  at  a 

28  reasonable  valuation. 

29  For  the  purposes  aforesaid,  the  insurance  commissioner 

30  or  other  persons  making  examination  shall  have  access  to 

31  all  the  securities,  books  and  papers  of  the  retirement  sys- 

32  tern,  and  may  summon  and  administer  oaths  and  examine 

33  as  witnesses  the  members  of  the  board  of  retirement  or  any 

34  other  person  relative  to  the  financial  affairs,  transactions 

35  and  conditions  of  the  retirement  system.     The  insurance 

36  commissioner  shall  preserve  in  a  permanent  form  a  full 

37  record  of  the  proceedings  at  such  examination,  and  the 


90  RETIREMENT  SYSTEM.  [Jan. 

38  results   thereof.     Upon  the   completion   of   such  examina- 

39  tion,    verification   and   valuation,    the   insurance   commis- 

40  sioner  shall  make  a  report  in  writing  of  his  findings  to  the 

41  board  of  retirement,  and  shall  send  a  copy  thereof  to  the 

42  county  commissioners. 

1  SECTION  9.     If,  in  the  judgment  of  the  insurance  com- 

2  missioner,  the  county  or  the  board  of  retirement  have  vio- 

3  lated  or  neglected  to  comply  with  any  of  the  provisions 

4  of  this  act,  or  of  the  rules  and  regulations  established  by 

5  the  board  of  retirement  hereunder,  he  shall  give  notice 

6  thereof  to  the  county  and  to  the  board  of  retirement,  and 

7  thereafter  if  such  violation  or  neglect  continues  shall  forth- 

8  with  present  the  facts  to  the  attorney-general  for  his  action. 

1  SECTION  10.     The  superior  court  shall  have  jurisdiction 

2  in  equity  upon  petition  of  the  insurance  commissioner  or 

3  any  interested  party  to  compel  the, observance  and  restrain 

4  the  violation  of  this  act,  and  of  the  rules  and  regulations 

5  established  by  the  board  of  retirement. 

1  SECTION  11.    This  act  shall  take  effect   upon   its  pas- 

2  sage. 


1911.]  HOUSE  — Xo.  1400.  91 


SENATE,  No.  440. 
(Cummmmiraltb 


AN  ACT  TO  AUTHORIZE  THE  COUNTIES  OF  THE  COMMON- 
WEALTH TO  ESTABLISH  RETIREMENT  SYSTEMS  FOR  THEIR 
EMPLOYEES. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  in 
General  Court  assembled,  and  by  the  authority  of  the  same,  as 
follows: 

1  SECTION  1.     In  this  act,   unless  the  context  otherwise 

2  requires:  — 

3  (a)  The  words  "retirement  system"  mean  the  arrange- 

4  ments  provided  in  this  act  for  the  payment  of  annuities 

5  and  pensions. 

6  (6)  The  word  "annuities"  means  the  payments  for  life 

7  derived  from  money  contributed  by  the  employees. 

8  (c)  The  word  "pensions"  means  the  payments  for  life 

9  derived  from  money  contributed  by  the  county. 

10  (d)  The  words  "regular  interest"  mean  interest  at  three 

11  per  cent  per  annum  compounded  semi-annually  on  the  last 

12  days  of  December  and  June,  and  reckoned  for  full  three 

13  and  six  months  periods  only. 

14  (e)  The    words    "continuous    service"    mean    uninter- 

15  rupted   employment,    with   this   exception:     a   lay-off   on 

16  account  of  illness  or  reduction  of  force;    and  a  leave  of 

17  absence,    suspension    or   dismissal    followed    by   reinstate- 

18  ment  within  one  year,  shall  not  be  considered  as  break- 

19  ing  the  continuity  of  service. 

ESTABLISHMENT   OF   RETIREMENT    SYSTEM. 

1  SECTION  2.     Any   county   in   this   commonwealth   may 

2  establish  a  retirement  system  for  its  employees  by  accept- 

3  ing  the  provisions  of  this  act  in  the  manner  hereinafter 

4  prescribed,  as  follows:    Upon  the  initiative  of  the  county 


92  RETIREMENT  SYSTEM.  [Jan. 

5  commissioners,  the  question  of  acceptance  shall  be  sub- 

6  mitted  to  the  voters  of  the  county  at  the  next  election. 

7  The  vote  in  each  case  shall  be  in  answer  to  the  question, 

8  to  be  placed  upon  the  ballot:   "Shall  an  act  passed  by  the 

9  general  court  in  the  year  1910,  entitled  'An  Act  authoriz- 

10  ing  the  counties  of  this  commonwealth  to  establish  retire- 

11  ment  systems  for  their  employees/  be  accepted?"     If  a 

12  majority  of  the   voters   voting   thereon   at   such   election 

13  shall  vote  in  the  affirmative,  this  act  shall  take  effect  in 

14  such  county,  as  hereinafter  provided. 

15  A  copy  of  the  vote,  sworn  to  by  the  county  commis- 

16  sioners  or  the  officers  corresponding  thereto,  shall,  within 

17  thirty  days  after  the  date  of  the  vote,  be  filed  in  the  office 

18  of    the    insurance    commissioner    of    this    commonwealth. 

19  The  latter  shall  forthwith  issue  a  certificate  that  the  retire- 

20  ment  system  is  declared  established  in  such  county,  to 

21  become  operative  on  the  first  day  of  January  or  the  first 

22  day  of  July  following  the  expiration  of  three  months  after 

23  the  date  of  such  certificate. 

THE   RETIREMENT  ASSOCIATION. 

1  SECTION  3.     Whenever  a   county   shall   have   voted   to 

2  establish  a  retirement  system  under  the  provisions  of  sec- 

3  tion  two,  a  retirement  association  shall  be  organized  as 

4  follows:  — 

5  (1)  All  employees  of  the  county,  on  the  date  when  the 

6  retirement  system  is  declared  established  by  the  issue  of 

7  the  certificate,  as  provided  in  section  two,  may  become 

8  members  of  the  association.     On  the  expiration  of  sixty 

9  days  from  said  date  every  such  employee  shall  be  con- 
10  sidered  to  have  elected  to  become,  and  shall  thereby  be- 
ll come,  a  member,  unless  he  shall  have,  within  that  period, 

12  sent  notice  in  writing  to  the  local  election  commissioners 

13  or  the  officers  corresponding  thereto  that  he  does  not  wish 

14  to  join  the  association. 

15  (2)  All  employees  who  enter  the  service  of  the  county 

16  after  the   date  when   the  retirement   system   is   declared 

17  established  by  the  issue  of  the  certificate,  as  provided  in 

18  section  two,  except  persons  who  have  already  passed  the 


1911.]  HOUSE  — No.  1400.  93 

19  age  of  fifty-five  years,  shall  upon  completing  thirty  days 

20  of   service   become   thereby   members   of  the   association. 

21  Persons  over  fifty-five  years  of  age  who  enter  the  service 

22  of  the  county  after  the  establishment  of  the  retirement 

23  system  shall  not  be  allowed  to  become  members  of  the 

24  association,  and  no  such  employee  shall  remain  in  the  ser- 

25  vice  of  the  county  after  reaching  the  age  of  seventy  years. 

26  (3)  No  officer  elected  by  popular  vote  may  become  a 

27  member  of  the  association,  nor  any  employee  who  is  or 

28  will  be  entitled  to  a  pension  from  the  county  for  any  rea- 

29  son  other  than  membership  in  the  association. 

30  (4)  Any  member  who  reaches  the  age  of  sixty  years  and 

31  who  has  been  in  the  continuous  service  of  the  county  for 

32  a  period  of  fifteen  years  immediately  preceding  may  retire 

33  or  may  be  retired  by  the  board  of  retirement,  and  any  mem- 

34  ber  who  reaches  the  age  of  seventy  years  must  so  retire. 

35  (5)  Any  member  who  has  completed  a  period  of  thirty- 

36  five  years  of  continuous  service  may  retire,  or  may  be  re- 

37  tired  at  any  age  by  the  board  of  retirement  if  such  action 

38  be  deemed  advisable  for  the  good  of  the  service. 

THE   BOARD   OF   RETIREMENT. 

1  SECTION  4.     (1)  The  management  of  the  retirement  sys- 

2  tern  is  hereby  vested  in  the  board  of  retirement,  consist- 

3  ing  of  three  members,  one  of  whom  shall  be  the  county 

4  treasurer;    the  second  member  shall  be  a  member  of  the 

5  association  elected  by  the  latter  within  thirty  days  after 

6  the  date  when  the  retirement  system  is  declared  estab- 

7  lished  by  the  issue  of  the  certificate,  as  provided  under 

8  section  two,  in  a  manner  to  be  determined  by  the  county 

9  commissioners;    the  third  member  shall  be  chosen  by  the 

10  other  two  members.     In  case  of  the  failure  of  the  latter 

11  to  choose  the  third  member  within  thirty  days  after  the 

12  election  of  the  second  member,  the  chairman  of  the  county 

13  commissioners  shall  appoint  such  third  member.     The  first 

14  person  so  chosen  or  appointed  as  third  member  shall  serve 

15  for  two  years;    otherwise  and  thereafter  the  term  of  office 

16  of  the  two  elected  members  shall  be  three  years.     On  a 

17  vacancy  occurring  in  the  board  for  any  cause  or  on  the  ex- 


94  RETIREMENT  SYSTEM.  [Jan. 

18  piration  of  the  term  of  office  of  any  member,  a  successor 

19  of  the  person  whose  place  has  become  vacant  or  whose 

20  term  has  expired  shall  be  chosen  in  the  same  manner  as 

21  was  his  predecessor. 

22  (2)  The  members  of  the  board  of  retirement  shall  serve 

23  without  compensation;    but  they  shall  be  reimbursed  out 

24  of  the  contingent  fund  for  any  expense  or  loss  of  salary  or 

25  wages  which  they  may  have  incurred  through  service  on 

26  the  board. 

27  (3)  The  county  treasurer  shall  have  charge  and  control 

28  of  the  funds  of  the  system,  subject  to  the  approval  of  the 

29  board   of  retirement,   and   shall   invest  and   reinvest  the 

30  same,  and  may  from  time  to  time  sell  any  securities  held 

31  by  him  and  invest  and  reinvest  the  proceeds  therefrom, 

32  and  any  and  all  unappropriated  income  of  said  funds:  pro- 

33  vided,  however,  that  all  funds  received  by  him  not  required 

34  for  current  disbursements  shall  be  invested  in  accordance 

35  with  the  provisions  of  the  laws  of  this  commonwealth  relat- 

36  ing  to  the  investment  of  the  funds  of  savings  banks.     He 

37  shall  in  the  investment  of  the  funds  give  preference  to  the 

38  securities  of  the  county.     He  may,  whenever  he  sells  such 

39  securities,  deliver  the  securities  so  sold  upon  receiving  the 

40  proceeds  thereof,  and  may  execute  any  and  all  documents 

41  necessary  to  transfer  the  title  thereto. 

42  (4)  The  board  of  retirement  shall  have  power  to  make 

43  by-laws  and  regulations,  not  inconsistent  with  the  provi- 

44  sions  of  this  act,  and  to  employ  such  clerical  or  other  assist- 

45  ance  as  may  be  necessary  for  the  fulfilment  of  its  purposes. 

46  (5)  The  board  shall  determine  the  percentage  of  wages 

47  that  employees  shall  contribute  to  the  pension  fund,  sub- 

48  ject  to  the  minimum  and  maximum  percentages,  and  shall, 

49  furthermore,  have  the  power  to  classify  employees  for  the 

50  purposes  of  the  retirement  system  and  to  establish  differ- 

51  ent  rates  of  contribution  for  different  classes  within  the 

52  prescribed  limits. 

53  (6)  The  county  treasurer  shall,  in  January  of  each  year, 

54  unless  for  cause   the   insurance   commissioner  shall   have 

55  granted  an  extension  of  time,  file  in  the  office  of  the  insur- 

56  ance  commissioner  a  sworn  statement,  which  shall  exhibit 


1911.]  HOUSE  — No.  1400.  95 

57  the  financial  condition  of  the  retirement  system  on  the  thirty- 

58  first  day  of  the  preceding  December,  and  its  financial  trans- 

59  actions  for  the  year  ending  with  said  day.     Such  statement 

60  shaJl  be  in  a  form  approved  by  the  insurance  commissioner, 

61  and  shall  show,  among  other  things,  the  liability  of  the 

62  retirement  system  on  account  of  the  following  items :  — 

A.  Deposit  Reserve. 

63  The  total  of  the  deposits  of  the  members  actually  re- 

64  ceived  by  the  treasurer  or  due  from  the  county  under  sec- 

65  tion  five,  (2)  A,  and  held  subject  to  withdrawal  by  such 

66  members. 

B.  Interest  Reserve. 

67  Regular  interest  on  such  deposits. 

C.  Annuity  Reserve. 

68  The  net  value  of  the  annuities  entered  upon  under  sec- 

69  tion  six,  (2)  B,  on  the  basis  of  the  mortality  tables  and 

70  interest  rates  provided  for  in  this  act. 

D.     Expense  and  Contingent  Fund. 

71  (a)  The  unexpended  portion  of  the  amounts  received 

72  under  section  five,  (1). 

73  (b)  The  contingent  fund. 

E.     Gifts  and  Bequests. 

74  The   amounts   received  as   gifts   or  bequests   and   held 

75  under  the  terms  of  such  gifts  or  bequests. 

F.     Other  Liabilities. 

76  All  other  liabilities. 

G.    Surplus. 

77  (a)  Annuity  Surplus.  —  The  undistributed  surplus  aris- 

78  ing  from  annuity  deposits,  as  defined  in  section  fiv3,  (2) 

79  B  (b). 

80  (6)  Other  Surplus.  —  All  unassigned  funds. 


96  RETIREMENT  SYSTEM.  [Jan. 


CREATION  OF  THE  RETIREMENT  FUND. 

1  SECTION  5.    The  funds  of  the  retirement  system  shall 

2  be  raised  as  follows :- 

(1)     Expense  and  Contingent  Fund. 

3  The  county  shall  appropriate  annually  such  an  amount 

4  as  may  be  necessary  to  defray  the  entire  expense  of  admin- 

5  istration,  according  to  estimates  prepared  by  the  treasurer. 

(2)     Annuity  and  Pension  Fund. 

6  A.  Deposits  by  Members.  —  Each  member  shall  deposit 

7  in  this  fund  from  his  wages  or  salary,  as  often  as  the  same 

8  are  payable,  not  less  than  one  per  cent  and  not  more  than 

9  five  per  cent  of  the  amount  of  his  wages  or  salary  as  deter- 

10  mined  by  the  board  of  retirement  under  the  provisions  of 

11  section  four   (5):    provided,   however,  that  employees  who 

12  receive  more  than  thirty  dollars  weekly  in  wages  or  sal- 

13  ary  shall  not  be  assessed  for  contribution  to  this  fund  on 

14  the  excess  above  that  amount. 

15  B.  Contributions  by  the  County.  —  (a)  Each  month  the 

16  county  shall  contribute  such  amount  as  the  board  of  re- 

17  tirement  may  determine  to  be  necessary  to  pay  current 

18  pensions  for  subsequent  service,  under  section  six  (2)  C  (a). 

19  (6)  Each  year  in  January  the  county  shall  contribute 

20  an  amount  equal  to  the  surplus  arising  from  annuity  de- 

21  posits;    in  case  there  should  be  a  deficiency  arising  from 

22  such  annuity  deposits,  instead  of  a  surplus,  then  the  county 

23  shall  make  good  such  deficiency. 

24  (c)  Each  month  the  county  shall  contribute  such  amount 

25  as  the  board  of  retirement  may  determine  to  be  necessary 

26  to  pay  current  pensions  for  prior  service  under  section 

27  six,  (2)  C  (6). 

28  (d)  Each  month  the  county  shall  contribute  such  amount 

29  as  the  board  of  retirement  may  determine  to  be  necessary 

30  to  ensure  the  minimum  payments  provided  for  in  section 

31  six,  E. 

(3)     Provision  for  Payments. 

32  All   amounts   payable   by   members   of   the   association 

33  under  paragraph  (2)  A  of  this  section  shall  be  deducted 


1911,]  HOUSE  — No.  1400.  97 

34  by  the  county  from  the  amount  payable  to  them  as  wages 

35  or  salary,  as  often  as  the  same  are  payable,  and  shall  be 

36  immediately  credited  to  the  pension  fund  by  the  county 

37  treasurer. 

DISTRIBUTION   OF   FUNDS. 

1  SECTION  6.     The  county  treasurer  shall  administer  the 

2  funds  of  the  retirement  system  in  accordance  with  the 

3  following  plan :  — 

(1)     Expense  and  Contingent  Funds. 

4  The  funds  provided  for  under  section  five,  (1),  shall  be 

5  used,  so  far  as  may  be  necessary,  for  the  payment  of  the 

6  expenses  of  administration.     The  portions  not  so  used,  if 

7  any,  shall  be  carried  to  the  contingent  fund,  any  portion 

8  of  which  may  be  transferred  to  any  other  fund  by  vote  of 

9  the  board  of  retirement.     In  case  the  amount  appropriated 

10  for  the  expense  fund  in  any  year  should  prove  insufficient, 

11  the  county  shall  appropriate  in  the  following  year  such 

12  additional  sum  as  may  be  required  to  cover  the  deficit. 

(2)     Annuity  and  Pension  Funds. 

13  A.  Refunds.  —  (a)  Should  a  member  of  the  association 

14  cease  to  be  an  employee  of  the  county  for  any  cause  other 

15  than  death  before  becoming  entitled  to  a  pension,  there 

16  shall  be  refunded  to  him  all  the  money  that  has  been  paid 

17  in  by  him  under  section  five,  (2)  A,  with  regular  interest. 

18  (b)  Should  a  member  of  the  association  die  before  becom- 

19  ing  entitled  to  a  pension,  there  shall  be  paid  to  his  legal 

20  representatives  all  the  money  that  has  been  paid  in  by  him 

21  under  section  five,  A,  with  such  interest  as  shall  have 

22  been  earned  on  such  deposits. 

23  B.  Annuities  from  Employees'  Deposits.  —  Any  member 

24  who  reaches  the  age  of  sixty  years  and  has  been  in  the 

25  continuous  service  of  the  county  for  fifteen  years  immedi- 

26  ately  preceding,  and  then  or  thereafter  retires  or  is  retired, 

27  any  member  who  retires  or  is  retired  at  the  age  of  seventy 

28  years,  and  any  member  who  is  retired  for  the  good  of  the 

29  service  under  the  provisions  of  section  three,    (5),   shall 

30  receive  an  annuity  to  which  the  sum  of  his  deposits  under 

31  section  five,   (2),  with  regular  interest,  shall  entitle  him, 


98  RETIREMENT  SYSTEM.  [Jan. 

32  according  to  the  tables  adopted  by  the  board  of  retire- 

33  ment,  in  one  of  the  following  forms:- 

34  (a)  A  life  annuity,  payable  monthly. 

35  (b)  A  life  annuity,  payable  monthly,  with  the  provision 

36  that  in  the  event  of  the  death  of  the  annuitant  before 

37  receiving  payments  equal  to  the  sum  at  the  date  of  his 

38  retirement  of  his  deposits  under  section  five,  (2)  A,  with 

39  regular  interest,  tHe  difference  shall  be  paid  to  his  legal 

40  representatives. 

41  C.  Pensions  derived  from  Contributions  by  the  County.  - 

42  (a)  Pensions  based  upon  subsequent  service.     Any  mem- 

43  ber  entitled  to  an  annuity  under  paragraph  (2)  B  of  this 

44  section  shall  receive  in  addition  thereto  a  pension  for  life 

45  payable  monthly  equivalent  to  that  annuity,  to  be   paid 

46  out  of  the  fund  contributed  by  the  county  under  the  pro- 

47  visions  of  section  five,   (2)  B   (a). 

48  (b)  Pensions  based  upon  prior  service.     Any  member  of 

49  the  association  who  reaches  the  age  of  sixty  years,  having 

50  been  in  the  continuous  service  of  the  county  for  fifteen 

51  years  or  more  immediately  preceding,  and  then  or  there- 

52  after  retires  or  is  retired,  shall  receive  in  addition  to  the 

53  annuity  and  pension  provided  for  by  paragraphs   (2)   B 

54  and  C  (a)  of  this  section,  an  extra  pension  for  life  as  large 

55  as  the  amount  of  the  annuity  to  which  he  might  have 

56  acquired  a  claim  if  the  retirement  system  had  been  in  opera- 

57  tion  at  the  time  he  entered  the  service  of  the  county,  and 

58  if  accordingly  he  had  paid  regular  contributions  from  that 

59  date  to  the  date  of  the  establishment  of  the  retirement 

60  association  at  the  same  rate  as  that  first  adopted  by  the 

61  board  of  retirement,  and  if  such  deductions  had  been  accu- 

62  mulated  with  regular  interest. 

63  Employees  who  had  already  reached  the  age  of  sixty 

64  years  at  the  time  the  retirement  system  was  established, 

65  and  employees  who  had  already  reached  the  age  of  fifty- 

66  five  years  at  that  date  and  also  became  members  of  the 

67  association,  may  be  retired  under  the  provisions  of  the 

68  preceding  paragraph  without  having  completed  the  other- 

69  wise  required  service  period  of  fifteen  years.     For  the  pur- 

70  pose  of  computing  any  pension  payable  for  prior  service, 


1911.]  HOUSE  — No.  1400.  99 

71  the  board  of  retirement  may  estimate  on  the  basis  deter- 

72  mined  by  them  the  wages  received  at  any  period  for  which 

73  they  may  deem  it  impracticable  to  consult  the  original 

74  records. 

75  D.  Application  of  Surplus.  —  The  board  of  retirement 

76  shall  have  power  to  determine  the  application  of  any  sur- 

77  plus,  as  defined  under  section  four,  (6)  /,  subject  to  the 

78  approval  of  the  insurance  commission. 

79  E.  Minimum   Payments.  —  In   no   case   shall   the   total 

80  monthly  payment  to  a  member  be  at  a  rate  less  than  two 

81  hundred  dollars  per  year. 

82  F.  Association    Membership    and    Pension    Certificate.  — 

83  Membership  in  the  association  shall  be  evidenced  by  a 

84  certificate  to  be  issued  to  each  member  by  the  board  of 

85  retirement,  and  the  right  to  an  annuity  or  a  pension  shall 

86  be  evidenced  by  a  policy  to  be  issued  to  each  member  who 

87  retires  or  is  retired  by  the  board  of  retirement. 

TAXATION,  ATTACHMENTS  AND   ASSIGNMENTS. 

1  SECTION  7.     The  funds  of  the  retirement  system,  so  far 

2  as  they  are  invested  in  personal  property,  shall  be  exempt 

3  from  taxation. 

4  That  portion  of  the  wages  of  a  member  deducted  or  to 

5  be  deducted  under  this  act,  the  right  of  a  member  to  an 

6  annuity  or  pension,  and  all  his  rights  in  the  fund  of  the 

7  retirement  system  shall  be  exempt  from  taxation,  and  from 

8  the  operation  of  any  law  relating   to  bankruptcy  or  insol- 

9  vency,  and  shall  not  be  attached  or  taken  upon  execution 

10  or  other  process  of  any  court.     No  assignment  of  any  right 

11  in  or  to  said  funds  shall  be  valid. 

SUPERVISION   BY  INSURANCE   COMMISSIONER. 

1  SECTION  8.     The  insurance  commissioner  shall  prescribe 

2  for  each  county  that  adopts  a  retirement  system  under 

3  the  provisions  of  this  act  one  or  more  mortality  tables, 

4  and  shall  determine  what  rates  of  interest  shall  be  estab- 

5  lished  in  connection  with  such  tables,  and  may  later  modify 

6  such  tables   or  prescribe  other  tables   to  represent  more 


100  RETIREMENT  SYSTEM.  [Jan. 

7  accurately  the  expense  of  the  pension  system,  or  may  change 

8  said  rates  of  interest  and  may  determine  the  application 

9  of  the  changes  so  made.     He  shall  also  prescribe  and  super- 

10  vise  methods  of  bookkeeping  of  each  retirement  associa- 

11  tion  formed  under  the  provisions  of  this  act. 

12  The  insurance  commissioner  shall  at  least  once  in  each 

13  year,  either  personally  or  by  deputy  or  assistant,  thor- 

14  oughly  inspect  and  examine  the  affairs  of  the  retirement 

15  association  to  ascertain  its  financial  condition,  its  ability 

16  to  fulfill  its  obligations,  whether  all  parties  in  interest  have 

17  complied  with  the  provisions  of  law  applicable  to  the  asso- 

18  ciation,  and  whether  the  transactions  of  the  board  of  re- 

19  tirement  have   been  in   accordance  with   the  rights   and 

20  equities  of  those  in  interest.     The  retirement  system  shall 

21  be  credited,  in  the  account  of  its  financial  condition,  with 

22  the  amounts  due  from  the  county,  under  the  provisions  of 

23  section  five,  (2)  B  (a),  its  investments  with  fixed  maturi- 

24  ties  upon  which  the  interest  is  not  in  default  at  amortized 

25  values,  and  its  other  investments  at  a  reasonable  valuation. 

26  For  the  purposes  aforesaid,  the  insurance  commissioner 

27  or  other  persons  making  examination  shall  have  access  to 

28  all  the  securities,  books  and  papers  of  the  retirement  sys- 

29  tern,  and  may  summon  and  administer  oaths  and  examine 

30  as  witnesses  the  members  of  the  board  of  retirement  or  any 

31  other  person  relative  to  the  financial  affairs,  transactions 

32  and  conditions  of  the  retirement  system.     The  insurance 

33  commissioner  shall  preserve  in  a  permanent  form  a  full 

34  record  of  the  proceedings  at  such  examination,  and  the 

35  results  thereof.     Upon  the  completion  of  such  examina- 

36  tion,    verification   and   valuation,    the   insurance    commis- 

37  sioner  shall  make  a  report  in  writing  of  his  findings  to  the 

38  board  of  retirement,  and  shall  send  a  copy  thereof  to  the 

39  county  commissioners. 

1  SECTION  9.     If,  in  the  judgment  of  the  insurance  com- 

2  missioner,  the  county  or  the  board  of  retirement  have  vio- 

3  lated  or  neglected  to  comply  with  any  of  the  provisions  of 

4  this  act,  or  of  the  rules  and  regulations  established  by  the 

5  board  of  retirement  hereunder,  he  shall  give  notice  thereof 


1911.]  HOUSE  — No.  1400.  101 

6  to  the  county  and  to  the  board  of  retirement,  and  there- 

7  after  if  such  violation  or  neglect  continues  shall  forthwith 

8  present  the  facts  to  the  attorney-general  for  his  action. 

1  SECTION  10.     The  superior  court  shall  have  jurisdiction 

2  in  equity  upon  petition  of  the  insurance  commissioner  or 

3  any  interested  party  to  compel  the  observance  and  restrain 

4  the  violation  of  this  act,  and  of  the  rules  and  regulations 

5  established  by  the  board  of  retirement. 

1  SECTION  11.     This  act  shall  take  effect  upon  its  pas- 

2  sage. 


YC  36117 


